Greg Roberts

Greg Roberts

Those of us who will receive Social Security benefits can look forward to an increase in our retirement checks in 2020 of 1.6%.

Some other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $137,700 from $132,900.

Social Security and SSI beneficiaries are normally notified by mail in early December about their new benefit amount. Most people who receive Social Security payments will be able to view their COLA notice online by means of their online account. Persons may create or access their S.S. account online at

Contributions to company retirement plans are increasing slightly over 2019: $19,500 annually for those under age 50 and $26,000 for the older crowd. The total allowable contribution to a 401(k) plan, including all employer contributions plus employee contributions (pretax, Roth and after tax) will creep up to $57,000 this year vs. $56,000 last year.

IRA contribution limits are the same as 2019: $6,000 annually for those under 50 and an extra $1,000 for the 50+ crowd. These limits are the same for Roth and traditional IRA’s. If you are not covered by a plan at work, you can’t have too much income to be able to deduct your traditional IRA contribution.

However, if you are covered by a plan at work and you file jointly, your deductible income limit begins to phase out at $104,000 of your modified adjusted gross income and evaporates for annual incomes greater than $124,000.

If your spouse is the one covered under an employer plan, then your IRA deductions are reduced if your joint income is over $196,000 and is eliminated at $206,000.

The numbers for single filers covered by a plan at work are $65,000 with a total phase out at $75,000 of annual income.

If you and your spouse file separately and either is covered by a plan at work, deductions for IRA contributions are not allowed if your AGI exceeds $10,000.

Roth IRA contribution limits are substantially higher: for single filers; a full contribution with an income not greater than $124,000 with a phase out up to $139,000. The limits for married couples filing jointly are $196,000 up to $206,000. If you and your spouse file separately, no Roth IRA contributions are allowable if your AGI exceeds $10,000 in 2020.

Capital gains tax rates remain low: no tax at all for taxpayers in the 10 to 15% tax brackets. That means married couples filing jointly can have taxable income of $80,000 in 2020 (including the gain) without paying any capital gains tax. The rate is 15% for everyone else except for the highest paid ($496,600 for married couples and $441,450 for singles). The max capital gains tax rate is 20% for the very highest wage earners.

Health Savings Account deductible contributions have been increased slightly in 2020. For persons enrolled in a high-deductible health plan, the limits are: $3,550 for individual plans and $7,100 for family coverage. Participants age 55 or older and contribute an extra $1,000.

For those who are making the maximum allowable contributions to their company retirement plans and IRAs, the HSA provides another way to amass tax-advantaged savings. The individual makes pretax contributions, the money accumulates tax-free, and qualified withdrawals are also tax-free. When you are 65 or older, you can take HSA withdrawals for any reason without any penalty.

Each person can contribute up to $15,000 a year to a 529 college savings plan on behalf of a specific individual without any gift tax implications. In South Carolina, one also receives a state income tax deduction for any contributions to the state-sponsored program.

Greg Roberts is a certified financial planner with 35 years of financial and estate planning experience. Do you have a financial planning question for Greg? Email him at