Whether you have decades left to work or are eyeing your retirement in he next few years, retirement planning should always be on your mind. As each year passes, there are new updates made to policies and different options made available to meet an individual's unique financial needs. Once you’ve had a look at the new 401k changes for this year, learn more how Public Credit Service Union, serving the greater Detroit area, can help you navigate your hard work and point your savings and investments towards success.
2020 401k Updates
While the specifics of your retirement contributions will depend on your age and what your employer contributes, the short answer is that you can contribute more to your 401k going forward.
For 2020, the maximum employees under 50 can contribute to their 401k increased by $500 for a new total of $19,500.
If you’re over 50 years of age, the maximum has increased by $1,000 for a larger annual contribution of $26,000.
Those employees who are age 50 or over and have a 401k catch-up plan can also add $500 more with a maximum contribution of $6,500.
Combined employer and employee contributions for 2020 have increased from $56,000 to $57,000.
The catch-up has also increased by $1,000 for a maximum of $63,500 after employer contributions.
These new terms have been implemented on many 401k plans but also include 457 and TSP plans as well. A 403b should follow similar guidelines.
Additional Retirement Planning Options
In addition to your traditional 401k, you’ll want to continue to explore how you can secure your retirement plans. Take a look at some of the other retirement planning options and how much you can contribute to each for 2020:
Traditional IRA: $6,000 for workers under 50, and $7,000 for workers 50 and over
Roth IRA: $6,000 for workers under 50, and $7,000 for workers 50 and over
SEP-IRAs: $57,000 for self-employed workers
SIMPLE-IRAs: $13,500 for workers under 50, and $16,500 for workers 50 and over
Learn More at Public Service Credit Union
Now that you know more about the new 401k and retirement updates for 2020, you should be more prepared to make decisions for your financial future. Be sure to check back with our blog for the latest on long-term budget planning, retirement planning options, and general financial advice -- and find a PSCU location near you when you want to upgrade from your bank.