For anyone saving for retirement, you can now put away even more cash! The Internal Revenue Service recently announced the increased contribution limits adjusted annually for cost of living expenses which are summarized below.
- Elective deferrals for employees participating in a 401(k), 403(b), most 457 plans, as well as the federal Thrift Savings Plan is increased from $18,500 to $19,000. Participants who are 50 or older can also make an extra $6,000 in catch-up contributions, contributing as much as $25,000.
- Annual contribution limits to an IRA, which have not increased since 2013, are also increasing next year. For 2019, you can contribute up to $6,000, an increase of $500. The additional catch-up contribution limit for people 50 and older remains unchanged at $1,000.
- The IRS has also increased income limits in regards to eligibility requirements for contributing to a Roth IRA. For 2019, the modified adjusted gross income (MAGI) for a single taxpayer must be under $137,000 and contributions are reduced beginning at $122,000. For married filing jointly taxpayers, the MAGI is less than $203,000, with phase-out starting at $193,000.
- The income limit for deducting contributions to traditional IRAs will also increase next year. In 2019, participants covered by a retirement plan through their employer will have their tax-deductible contribution to a traditional IRA phased-out if their filing status is married filing jointly, and their adjusted gross income (AGI) is more than $103,000 but less than $123,000, increased from between $101,000 and $121,000. The phase-out begins for single or head of household taxpayers with AGI of more than $64,000 but less than $74,000, up from $63,000 to $73,000.
- SIMPLE IRA participants also benefit from an increased annual contribution amount. In 2019, the annual limit is increased to $13,000 for those younger than 50. A catch-up contribution of $3,000 is also available to those 50 or older, making the total $16,000.
Participants may want to consider increasing contributions in order to take full advantage of the increased limits thus maximizing their retirement benefits.