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January 22, 2020

2020 IRS Contribution Limits

By Beth Knight-Pinneo, Alliance Benefits

Now that it’s January, perhaps you are curious what you can contribute to your 403(b) and your HSA for 2020.

Health Savings Account (HSA) Contributions

If you are on an HSA-eligible health insurance, such as the Alliance Health Plan, here are the IRS maximums you can contribute to your HSA. Employee and employer HSA contributions count together toward these limits:

  • If only one family member is enrolled in the HSA-eligible health plan (Individual Coverage), you can contribute up to $3,550. The Alliance Health Plan already includes $1,008 employer contribution built into the premiums ($84/month for a single enrollee), so this means you can contribute up to $2,542 more throughout the year.
  • If you have two or more family members enrolled in your HSA-eligible health plan, this is called “Family Coverage” and you can contribute up to $7,100. Be sure to include $2,004 already provided through your employer within the Alliance Health Plan ($167/month for Family Coverage). This means you can contribute up to $5,096 more throughout the year.
  • If you are age 55+, you can contribute up to $1,000 extra.

If you are enrolled in the Alliance Health Plan and would like to increase your HSA contributions throughout the year, please request that your employer complete a 2020 HSA Change Form.

403(b) Retirement Contributions

Here are the IRS maximums you can contribute to a 403(b) retirement plan account:

Note that employee and employer contributions have different limits 

  • If you are under age 50, you can contribute up to $19,500. You can contribute up to this amount as either pre-tax or Roth (after tax) withholding from your pay.
  • If you are age 50+, you can contribute up to $26,000 (either as a pre-tax or Roth deduction from your pay).
  • The IRS allows very generous employer contribution levels, allowing up to $57,000 for all employee and employer contributions combined (but be sure to note the next rule).
  • However, all employee and employer contributions combined cannot exceed 100% of includible compensation (excluding housing allowance). Pastors who designate most of their salary as housing allowance may be limited in how much they can contribute to their 403(b). This should be a point of caution for treasurers and pastors when planning housing allowance and 403(b) contribution set-up for the year. For example, if a pastor’s total pay is $24,000 per year, including $21,000 housing allowance, this means all employee and employer combined 403(b) contributions cannot exceed $3,000 per year.

If you are enrolled in the Alliance 403(b) Retirement Plan and would like to increase your 403(b) contributions, please work with your church treasurer to change your withholding and complete forms. Church treasurers should complete an updated Monthly Contribution Report, and the employee should complete a Paycheck Contribution Election form. Church treasurers should keep a copy and send both forms to Alliance Benefits (not to Empower). You may fax the forms to Alliance Benefits at (719) 262-5397 or email to retirement@cmalliance.org. Please put “Request Secure Email” in your subject line and we will send you a secure email you may use to return your forms securely.

Regardless of what amounts you choose for your retirement and HSA accounts, it’s good to know you are investing in your own future!

 

Beth joined Alliance Benefits in January 2001. In her role as Benefits Consultant, she focuses on building relationships with churches and districts, and assisting with Health Plan and 403(b) questions. She is assigned to serve the churches and districts in the Western and Southern US, and the multi-cultural districts.


Posted in: 403(b) Plan Tools, Health Plan Tools