Key Internal Revenue Code (IRC) limits for qualified retirement plans will increase modestly in 2020, Mercer projects. However, the 415(c) maximum annual addition and the 401(a)(17) limit on retirement plan compensation are so close to the rounding breakpoint that significant inflation during the next few months could send the limits higher.
These estimates are determined using the Code’s cost-of-living adjustment and rounding methods, the Consumer Price Index for All Urban Consumers (CPI-U) through May, and estimated CPI-U values for June–September. Qualified plan limits are based on the year-to-year increase in the third-quarter CPI-U, so figures can’t be finalized until after September CPI-U values are published in October. The IRS is expected to announce official 2020 limits for retirement and other benefit-related purposes in late October.