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2019 IRA and 401(k) contribution limit increases announced by the IRS

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November 07, 2018

By Alliant Credit Union

Alliant financial consultants

Last week, the IRS announced the 2019 cost-of-living adjustments made to contribution limits and income thresholds for retirement plans. This year, cost-of-living index increases were high enough to trigger adjustments to nearly all retirement-related IRS contribution and income amounts for 2019 vs. 2018. The only key amounts that remain the same from 2018 are catch-up contribution amounts for those over age 50. 

401(k)

  • Contribution limits for employee 401(k) plans will increase from $18,500 in 2018 to $19,000 in 2019.
  • Catch-up contributions for 401(k) participants aged 50 and older stay at $6,000.

Traditional IRAs (individual retirement account)

  • The annual contribution cap for individual retirement accounts (IRA) is up $500 from 2018 at $6,000 per eligible individual.
  • Catch-up contributions for those 50 and over remain capped at an additional $1,000 ($7,000 total contribution).
  • The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $64,000 and $74,000 (up $1,000 from 2018).
  • For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out increases by $2,000 vs. 2018, to a range of $103,000 to $123,000. 
  • 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 IRAs

  • For married couples filing jointly, the income phase-out range for taxpayers contributing to a Roth IRA is at an AGI of $193,000 to $203,000, up from $189,000 to $199,000 in 2018.
  • For singles and heads of household, the Roth IRA income phase-out range is $122,000 to $137,000, up from $120,000 to $135,000.
  • For a married individual filing a separate return, the Roth IRA phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000

 Summary of 2019 increases vs 2018 limits

      2018 2019
Individual Retirement Accounts (IRAs)                                                       
IRA Contribution Limit $5,500 $6,000
IRA Catch-Up Contributions 1,000 1,000
 
IRA AGI Deduction Phase-out Starting at 
   
Joint Return $101,000 $103,000
Single or Head of Household 63,000 64,000
 
SEP
 

 
 
SEP Minimum Compensation $600 $600
SEP Maximum Contribution 55,000 56,000
SEP Maximum Compensation 275,000 280,000
 
SIMPLE Plans 
   
SIMPLE Maximum Contributions $12,500 $13,000
Catch-up Contributions 3,000 3,000
 
401(k), 403(b), Profit-Sharing Plans, etc.     
 
 
 
 
Annual Compensation $275,000 $280,000
Elective Deferrals 18,500 19,000
Catch-up Contributions 6,000 6,000
Defined Contribution Limits 55,000 56,000
ESOP Limits 1,105,000 1,130,000
 
Other
 
 
 
 
HCE Threshold $120,000 $125,000
Defined Benefit Limits 220,000 225,000
Key Employee 175,000 180,000
457 Elective Deferrals 18,500 19,000
Control Employee (board member or officer) 110,000 110,000
Control Employee (compensation-based) 220,000 225,000
Social Security Taxable Wage Limit 128,400 132,900

 

For more information on these updated contribution limits and income caps, consult your tax advisor.
 

Need help with your retirement plan? Visit our website or call 800-328-1935 to set up a no-cost, no-obligation financial planning session with a financial consultant with Alliant Retirement and Investment Services.


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