IRS Reveals 401k, IRA Contribution Limits For 2019

05 Nov 2018 9:59 AM | Bill Brewer (Administrator)

401k, retirement, IRS, contribution limits

Limit increases take effect January 1

by Jessa Claeys 

November 2, 2018

in RegulationYour 401k News

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The Internal Revenue Service announced Thursday that it will raise contribution limits for employees who participate in 401k, 403b, most 457 plans, as well as the federal government’s Thrift Savings Plan, from $18,500 in 2018 to $19,000.

Limit increases are calculated annually according to inflation rates and take effect January 1.

“Based on Betterment for Business analysis, over roughly 30 years, that extra $500 can equate to $41,900.84 at a 6 percent rate of return. Taxpayers who are on the fence about increasing their contributions should see this as a great opportunity for a long-term investment in their retirement savings,” Eric Bronnenkant, head of Tax at Betterment for Business, told 401(k) Specialist in an interview.

For employees without access to workplace retirement plans, the cap on Individual Retirement Accounts (IRAs) has finally gone up, as well. The new max is $6,000, compared to $5,500—an amount that had been in place since 2013.

The annual catch-up contribution for IRA savers age 50 and older, however, remains unchanged at $1,000.

The IRS issued technical guidance detailing these items in Notice 2018-83.

Phase-out ranges were updated for 2019, as well.

IRA deductions:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $64,000 to $74,000, up from $63,000 to $73,000.
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $103,000 to $123,000, up from $101,000 to $121,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $193,000 and $203,000, up from $189,000 and $199,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

Roth IRA deductions:

  • The income phase-out range for taxpayers making contributions to a Roth IRA is $122,000 to $137,000 for singles and heads of household, up from $120,000 to $135,000.
  • For married couples filing jointly, the new range is $193,000 to $203,000, compared to $189,000 and $199,000 last year.
  • For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

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Source: 401(k) Specialist magazine 

https://401kspecialistmag.com/irs-reveals-401k-ira-contribution-limits-for-2019/

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