Every Jan. 1, there are new changes to the federal tax code that go into effect – many of which can impact your retirement savings plan. Here are some of those changes for 2020 that you’ll want to pay attention to:

  • Workplace retirement plans: You can contribute up to $19,500 to your 401(k), 403(b), 457 and Thrift Savings Plan accounts — a $500 increase over last year. If you’re age 50 or older, you are allowed a $6,500 catch-up for a total contribution of up to $26,000.
  • For self-employed or small-business owners: You can contribute up to $57,000 to a SEP IRA or Solo 401(k) plan.
  • IRAs: You can contribute up to $6,000 to traditional and Roth IRAs — or up to $7,000 if you are 50 or older. The limit for employee contributions to SIMPLE retirement accounts is $13,500 (or up to $3,000 more if you are 50 or older).
  • Federal gift tax: You can give up to $15,000 per person for tax year 2020 without incurring any gift tax (recipients never pay a gift tax). You can also give up to $11.58 million over the course of your lifetime — and if you’re married, your spouse can do the same.
  • Federal estate tax: Upon your death, you can leave an unlimited amount of money to your spouse and up to $11.58 million to other heirs. If you’re married and you obtain certain estate planning documents, you and your spouse can leave up to $23.16 million to heirs, free of estate tax.

Both the gift and estate tax provisions, along with the personal tax cuts, are set to expire after Dec. 31, 2025, but the corporate tax relief was made permanent.

In the accompanying tables, the figures in the 2019 columns apply to the tax return you’ll file for tax year 2019. The figures in the 2020 columns pertain to the tax return you’ll file for 2020 (which you’ll do in 2021).

Retirement Plans

2020

2019

Traditional, Roth IRA

$6,000

$6,000

Simple IRA

$13,500

$13,000

401(k), 403(b), TSP plans

$19,500

$19,000

SEP IRA & Individual 401(k)

$57,000

$56,000

Catch-Up Contributions
(available if you are age 50 or older)

2020

2019

Traditional, Roth IRA

$1,000

$1,000

Simple IRA

$3,000

$3,000

401(k), 403(b), TSP plans

$6,500

$6,000

Roth IRA Phase-Out Income Limits

2020

2019

Married filing jointly

$196,000 – $206,000

$193,000 – $203,000

Single

$124,000 – $139,000

$122,000 – $137,000

Deductible IRA Phase-Out Income Limits
If you are not covered by a retirement plan at work, but your spouse is

2020

2019

Married filing jointly*
*or if you lived with your spouse at any time during the year

$196,000 – $206,000

$193,000- $203,000

Deductible IRA Phase-Out Income Limits
If you are covered by a retirement plan at work

2020

2019

Married filing jointly

$104,000 – $124,000

$103,000 – $123,000

Single

$65,000 – $75,000

$64,000 – $74,000

Standard Deductions

2020

2019

Single

12,400

$12,200

Married, filing jointly

$24,800

$24,400

Married, filing separately

$12,400

$12,200

Head of household

$18,650

$18,350

Schedule A long-term care premium deduction (NOTE: The long-term care deduction is not an outright federal tax deduction. The amount shown for your age group is added to your other medical expenses for the year, and total costs that exceed 7.5 percent of your adjusted gross income can be deducted for 2019 and 2020. If you’re self-employed, you can deduct the premiums for your qualified long-term care policies if you made a net profit; deductible medical expenses are defined in IRS Publication 502.)

If you are age 40 or under

$430

$420

If you are age 41–50

$810

$790

If you are age 51–60

$1,630

$1,580

If you are age 61–70

$4,350

$4,220

If you are age 71 or over

$5,430

$5,270


2019 Tax Brackets
(For taxes due April 15, 2020)

Tax Rate

Single

Head of Household

Married Filing Jointly or Qualifying Widow

Married Filing Separately

10%

$0 to $9,700

$0 to $13,850

$0 to $19,400

$0 to $9,700

12%

$9,701 to $39,475

$13,851 to $52,850

$19,401 to $78,950

$9,701 to $39,475

22%

$39,476 to $84,200

$52,851 to $84,200

$78,951 to $168,400

$39,476 to $84,200

24%

$84,201 to $160,725

$84,201 to $160,700

$168,401 to $321,450

$84,201 to $160,725

32%

$160,726 to $204,100

$160,701 to $204,100

$321,451 to $408,200

$160,726 to $204,100

35%

$204,101 to $510,300

$204,101 to $510,300

$408,201 to $612,350

$204,101 to $306,175

37%

$510,301 or more

$510,301 or more

$612,351 or more

$306,176 or more

2020 Tax Brackets (For taxes due April 15, 2021)

Tax Rate

Single

Head of Household

Married Filing Jointly or Qualifying Widow

Married Filing Separately

10%

$0 to $9,875

$0 to $14,100

$0 to $19,750

$0 to $9,875

12%

$9,876 to $40,125

$14,101 to $53,700

$19,751 to $80,250

$9,876 to $40,125

22%

$40,126 to $85,525

$53,701 to $85,500

$80,251 to $171,050

$40,126 to $85,525

24%

$85,526 to $163,300

$85,501 to $163,300

$171,051 to $326,600

$85,526 to $163,300

32%

$163,301 to $207,350

$163,301 to $207,350

$326,601 to $414,700

$163,301 to $207,350

35%

$207,351 to $518,400

$207,351 to $518,400

$414,701 to $622,050

$207,351 to $311,025

37%

$518,401 or more

$518,401 or more

$622,051 or more

$311,026 or more

Gifts and Bequests

On top of the $15,000 annual exclusion, you can give up to $11.58 million in 2020 during your lifetime with no federal gift tax, and your spouse can do the same.

Hire a Professional

To ensure you don’t overlook any deductions and credits available to you, we recommend you retain the services of a professional tax preparer. We caution against reliance on friends or family members for two reasons: Only CPAs, enrolled agents and attorneys are permitted to represent you before the IRS — meaning you’re on your own to explain your return if it was prepared by a friend. And well-meaning friends might not stand by their work, so if the IRS assesses a penalty, you’ll have to pay it. Professional tax advisors are often willing to pay any penalties resulting from their errors.


This material was prepared for informational and/or educational purposes only. Neither Financial Engines Advisors L.L.C (also referred to as Edelman Financial Engines) nor its affiliates offer tax or legal advice. Be sure to consult with a qualified tax or legal professional regarding the best options for your particular circumstances.