2020 401(k) Contribution Limit
For 2020, the 401(k) Contribution Limit is $19,500 (Elective deferral) and +$6,500 (Age 50 catch-up).
Effective 2020-01-01Source: Notice 2019-59 (IRS)Verified 2026-09-01
Compared with 2019
| Item | 2019 | 2020 | Change |
|---|---|---|---|
| Elective deferral | $19,000 | $19,500 | +$500 (+2.6%) |
| Age 50 catch-up | +$6,000 | +$6,500 | +$500 (+8.3%) |
Who it applies to
Participants in employer-sponsored deferred compensation plans subject to Internal Revenue Code Section 402(g)
What changed this year, and why
For 2020, the IRS increased the elective deferral limit for employer-sponsored retirement plans and the catch-up contribution limit for older participants, as announced in Notice 2019-59.
Common questions
- What is the elective deferral limit for employer-sponsored retirement plans in 2020?
- The limit on elective deferrals under Section 402(g) of the Internal Revenue Code is $19,500 for 2020.
- What is the catch-up contribution limit for older participants in 2020?
- Participants aged 50 or older may make additional catch-up contributions of $6,500 for 2020.
What the limit counts, and the tax it does not save
An elective deferral is the amount you choose to have your employer contribute to a retirement fund instead of paying to you directly. It is treated as an employer contribution to a qualified plan. The key tax feature is that elective deferrals are not included in wages subject to federal income tax at the time they are contributed, which is what gives them their tax-deferred status. However, they are still included in wages subject to social security and Medicare taxes. Elective deferrals apply to several types of retirement plans, including section 401(k) plans, the Thrift Savings Plan for federal employees, SARSEP plans, SIMPLE plans, section 403(b) plans, section 501(c)(18)(D) plans, and section 457 plans. For 2020, the overall limit on elective deferrals across all these plans combined is $19,500, unless you are age 50 or older and qualify for additional catch-up contributions.
An elective deferral, other than a designated Roth contribution (dis- cussed later), isn't included in wages subject to income tax at the time contributed. However, it’s included in wages subject to social security and Medicare taxes.
Publication 525 (2020), Taxable and Nontaxable Income (IRS)
One limit across every plan you defer into
The $19,500 elective deferral limit for 2020 is a single aggregate cap that applies across all retirement plans in which you make salary-reduction contributions. If you participate in multiple plans, the total of all your pre-tax elective deferrals combined cannot exceed $19,500. Each individual plan may have its own internal limit, but those plan-specific limits are subordinate to the overall limit. Amounts deferred under specific plan limits are part of the overall limit on deferrals. While your employer or plan administrator should apply the proper annual limit when calculating contributions, you are responsible for monitoring the total amount you defer across all plans to ensure you do not exceed the overall limit. If you defer more than $19,500 across all your plans in 2020, the excess is subject to special correction rules and may be taxable to you in the year it was deferred.
Amounts deferred under specific plan limits are part of the overall limit on deferrals.
Publication 525 (2020), Taxable and Nontaxable Income (IRS)
The catch-up once you are old enough for it
Two conditions, and the age is the one people know: you may make catch-up contributions if you are age 50 or older by the end of your tax year, so a birthday in December still counts for the whole year. The amount for 2020 is $6,500 for a 401(k) plan, and it is an additional elective deferral - it sits on top of the $19,500 limit rather than inside it, which is why someone eligible for both can defer the two added together. The same figure covers 403(b) plans, the Thrift Savings Plan, SARSEPs and governmental 457 plans, so changing employer between those does not reset it. What the passage does not do is oblige your plan to offer catch-up contributions at all. Whether the option exists for you is a question about your plan document, and the administrator is the one who answers it.
You may be allowed catch-up contributions (additional elective de- ferrals) if you're age 50 or older by the end of your tax year. For 2020, the catch-up limit for section 401(k) and 403(b) plans, the TSP, SAR- SEP plans, and governmental section 457 plans is $6,500.
Publication 525 (2020), Taxable and Nontaxable Income (IRS)
What happens if you defer more than the limit
If your elective deferrals exceed the annual limit, you must notify your plan by the date required by the plan. If the plan permits, the excess amount will be distributed to you. If you participate in more than one plan, you can have the excess paid out of any of the plans that permit these distributions, but you must notify each plan by its required deadline of the amount to be paid from that particular plan. The plan must then pay you the excess amount plus any income earned on that amount by April 15 of the following year. You must include the excess deferral in your income for the year of the deferral. If you fail to remove the excess by the deadline, you face double taxation: the excess is taxed once when contributed and again when eventually distributed as a retirement benefit, unless it was a designated Roth contribution. The excess deferral amount must be added to your wages on your tax return for the year it was deferred.
If your deferrals exceed the limit, you must notify your plan by the date re- quired by the plan.
Publication 525 (2020), Taxable and Nontaxable Income (IRS)
Roth deferrals count against the same limit
Designated Roth contributions are a type of elective deferral that you can choose instead of traditional pre-tax deferrals. With designated Roth contributions, you elect to have part or all of your elective deferrals treated as after-tax Roth contributions. Unlike traditional elective deferrals, designated Roth contributions are included in your wages and subject to income tax in the year they are made. However, qualified distributions from the Roth account are not included in income when withdrawn. Your retirement plan must maintain separate accounts and record-keeping for designated Roth contributions. Importantly, designated Roth contributions count toward the same $19,500 annual elective deferral limit as traditional pre-tax deferrals. You cannot exceed the overall limit by splitting contributions between pre-tax and Roth designated contributions. The total of all your elective deferrals, whether pre-tax or designated Roth, cannot exceed the annual limit.
Designated Roth contributions are treated as elective deferrals, except that they're included in income.
Publication 525 (2020), Taxable and Nontaxable Income (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Notice 2019-59 (IRS)
- Elective deferral
The limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) is increased from $19,000 to $19,500.
- Age 50 catch-up
The dollar limitation under § 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in § 401(k)(11) or § 408(p) for individuals aged 50 or over is increased from $6,000 to $6,500.