Contribution limits to your 401(k) and other retirement plans:

Maximum employee contribution rises to $19,500

Combined employer and employee contribution rises $57,000

Employee catch-up contribution for participants ages 50+ rises to $6,500

Combined employer and employee contribution for ages 50+ rises to $63,500

The limitation regarding SIMPLE accounts rises to $13,500

Traditional and Roth IRA contributions remain the same as 2019 at $6,000

Catch-up contributions for IRAs for ages 50+ remain the same as 2019 at $1,000

The Secure Act

The Setting Every Community Up for Retirement Enhancement Act of 2019 – the SECURE Act – passed through the House of Representatives and the Senate and was signed by President Trump shortly before Christmas.

Incorporated into a broader 2020 fiscal year appropriations bill, the SECURE Act is aimed at helping Americans more easily participate in tax-advantaged retirement accounts as well as helping ensure that older retirees do not outlive their assets.

While the SECURE Act contains 29 provisions aimed at helping Americans better save for retirement, here are a few highlights:

• It offers tax incentives to small businesses to set up automatic enrollment in retirement plans

• It allows employers to join with other companies and offer joint-retirement plans, which should help keep costs down

• It allows many part-time workers to participate in employer-sponsored retirement plans

• It creates a new early withdrawal penalty tax exemption of up to $5,000 from an IRA to use for childcare costs

• It pushes back the Required Minimum Distribution Age from 70 ½ to 72

• It allows for the inclusion of more lifetime-income options, including annuities

Start Planning Your 2020 Changes Now if you have not already started

The changes from the IRS and the new SECURE Act both alter the rules surrounding retirement plans. And while many of them are simple, others are very complex. As such, investors should study the details and potential implications before blindly adopting.

Talk to your financial advisor to make sure you understand the changes and potential implications.