Tax Update: IRS Announces Higher Estate and Gift Tax Limits; Retirement Plan Contribution Limits for 2020
By: Brian Hinkle, Mark Hipp and Kara Eshenaur
Estate and Gift Tax Exemption
The Internal Revenue Service has announced that the estate and gift tax exemption for 2020 is $11.58 million per person, up from $11.4 million per person in 2019. A married couple can now shield up to $23.16 million without paying any federal estate or gift tax. The annual gift tax exclusion will remain at $15,000 per recipient.
Retirement Contribution Limits
The IRS announced a $500 increase for the annual contribution limits to 401(k) plans and “catch-up” contributions. For tax year 2020, taxpayers may contribute up to $19,500 to 401(k) plans and make an additional $6,500 in catch-up contributions if the taxpayer is aged 50 or older.
Contribution limits for Individual Retirement Accounts (IRAs) have stayed the same, at $6,000 per year. SEP retirement account contributions limits for 2020 have been increased to $57,000, up from $56,000 in 2019. SIMPLE retirement account contribution limits for 2020 have been increased to $13,500, up from $13,000 in 2019.
Individuals interested in taking advantage of the planning opportunities presented in 2020 should consult with their legal, tax, and financial advisors to learn more. Please contact an attorney in Mette, Evans & Woodside’s Estates and Trusts Practice Group to schedule a meeting.