A pending bill (H.R. 6562) “Securing Additional Value for Every Retirement Saver Act” or the “SAVERS Act” introduced by Rep. Patrick McHenry of North Carolina would triple the employee contribution limits for solo 401k plans and also increase the contribution limits for IRAs in 2020. The purpose of greatly increasing the contribution limits for 2020 is for retirement account holders to makeup loss ground resulting from COVID-19 pandemic.
The participant would be able to use her earned income from 2019 or 2020 to make the 2020 increased employee solo 401k contribution amount. The employee contribution limit for 2020 is $19,500, so under the pending bill the employee contribution limit would increase from $19,500 to $58,500.
Here is what Rep. Patrick McHenry said: “Every American is feeling the economic impact of COVID-19.” “We need to give savers the opportunity to shore up the savings they have worked so hard to grow. The SAVERS Act is a commonsense and temporary fix to put these everyday investors back on the right track toward their retirement goal, tax-free.”