As you look ahead to deciding how much to put aside for retirement in 2020, it’s important to know that the numbers will change.
“Next year, for 2020, the amounts for almost everyone have increased, so you can save more,” said Michael Devine with the Internal Revenue Service. “For people who are 50 and over, you can do what we call a catch-up contribution. That can be $6000 this year in 2019, it’s going to go up $500 next year in 2020.”
The total amount a taxpayer can contribute to their 401(k) is increased again for everyone in 2020.
“Next year, if you’ve got a 401(k), you can contribute up to $19,500,” said Devine. “If you’re over 50, you can add another $6,500 to that. We’re talking $26,000 that you can contribute to your retirement.”
In order to give yourself some breathing room in your budget to do that, make sure you aren’t having the wrong amount withheld from your paycheck.
“If you haven’t used our Withholding Estimator to find out whether you’ve had enough withheld from your paycheck, you need to do that now,” said Devine. “There’s still time to adjust your last few paychecks. You can even make an estimated payment so that you get a refund, rather than get a bill when you file your tax return.”
To find out information specific to your situation, go to irs.gov.