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401(k) Contribution Limit Increases To $19,000 For 2019; IRA Limit Increases To $6,000

WASHINGTON – The Internal Revenue Service (IRS) recently announced Cost-Of-Living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019.  The IRS has issued technical guidance detailing these items in Notice 2018-83.

 

Highlights Of Changes For 2019:

 

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the Federal Government’s Thrift Savings Plan is increased from $18,000.00 to $19,000.00.

 

For IRAs, the limit on annual contributions, which last increased in 2013, is increased from $5,500.00 to $6,000.00.  The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.00.

 

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the saver’s credit all increased for 2019.

 

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.  (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.)  Here are the phase-out ranges for 2019:

·         For single taxpayers covered by a workplace retirement plan, the phase-out range is $64,000.00 to $74,000.00 up from $63,000.00 to $73,000.00.

·         For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $103,000.00 to $123,000.00, up from $101,000.00 to $121,000.00.

·         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 $193,000.00 and $203,000.00, up from $189,000.00 and $199,000.00.

·         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 $0.00 to $10,000.00.

The income phase-out range for taxpayers making contributions to a Roth IRA is $122,000.00 to $137,000.00 for singles and heads of household, up from $120,000.00 to $135,000.00.  For married couples filing jointly, the income phase-out range is $193,000.00 to $203,000.00, up from $189,000.00 to $199,000.00.  The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual Cost-Of-Living adjustment and remains $0.00 to $10,000.00.

 

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $64,000.00 for married couples filing jointly, up from $63,000.00; $48,000.00 for heads of household, up from $47,250.00; and $32,000.00 for singles and married individuals filing separately, up from $31,500.00.

 

Highlights Of Limitations That Remain Unchanged From 2018:

 

The catch-up contribution for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the Federal Government’s Thrift Savings Plan remains unchanged at $6,000.00.

 

Source of Information: The Internal Revenue Service




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