New 401(k) and IRA Contribution Limits Ahead for 2019!
Wouldn’t you like to put an extra $500 aside in your 401(k) or IRA? Well in 2019 you can do just that thanks to the IRS annual cost of living increase. That means participants can contribute a total of $19,000 pre-tax in 2019 to a 401(k), 403(b), or 457, and $6000 to a traditional IRA or Roth.
The news gets even better if you are over 50 years old. You can add a “catch-up” contribution of $1000 to your IRA for a grand total of $7000 in 2019. The “catch-up” contribution for a 401(k), 403(b), or 457 plan is $6,000, so that means a total of $25,000 can be stashed away in 2019. The overall limit (including employer contributions and profit sharing) for defined-contribution plans is now $56,000.
Some of the other notable COLAs for 2019 include:
- The limitation on the annual benefit under a defined benefit plan is increased from $220,000 to $225,000.
- The annual compensation limit is increased from $275,000 to $280,000.
- The dollar amount for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period is increased from $1,105,000 to $1,130,000, while the dollar amount used to determine the lengthening of the 5-year distribution period is increased from $220,000 to $225,000.
- The limitation used in the definition of “highly compensated employee” increased from $120,000 to $125,000.
- The limitation concerning the definition of “key employee” in a top-heavy plan is increased from $175,000 to $180,000.
- The limitation regarding SIMPLE retirement accounts is increased from $12,500 to $13,000, BUT The compensation amount regarding simplified employee pensions (SEPs) remains unchanged at $600.
The adjusted gross income limitation for determining the retirement savings contributions credit for married taxpayers and for taxpayers filing as head of household have increased slightly. The income ranges for determining eligibility to make deductible contributions to IRAs, to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2019. They can be found at the link below.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. The income phase-out ranges for Roth IRAs is increasing, to $122,000 to $137,000 for singles and heads of household, and to $193,000 to $203,000 for married couples filing jointly. More information on phase out ranges and can be found at https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19000-for-2019-ira-limit-increases-to-6000
These are just highlights we have shared and by no means an exhaustive list! Many items have remained unchanged from last year.
Contact Us: Need a retirement strategy to make the most of the money you’ve saved? New contribution limits present new opportunities. Feel free to contact me, Cory Lyon, directly at 561-209-1120, with any questions regarding financial investment strategies. Need to reexamine your current investments? We can assist you in making an informed decision if your financial goals have changed. At TFG Financial, we believe in customized investment portfolio design and personalized asset management. I act as a fiduciary for all my clients.
TFG Financial Advisors, LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results. Investments involve risk and are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.
