2019 Contribution Limits Increase for 401(k), IRA and Related Retirement Plans

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Employees who participate in retirement plans, such as a 401(k), 403(b), most 4S7(b), and the federal government’s Thrift Savings Plan, will be able to contribute more of their paycheck to their plan in 2019; the limit has increased from $18,S00 to $19,000. The catch-up limit for employees age SO and over, which includes individuals who will turn SO in 2019, remains unchanged at $6,000. This means that employees age SO and over can contribute a total of $2S,000 to their retirement plan in 2019.

For the first time since 2013, the annual contribution limit to an IRA will increase as well, from $S,S00 to $6,000. The catch-up limit for age SO and over individuals will remain at $1,000, allowing them to contribute a maximum of $7,000 to their IRA in 2019.

On November 1st the Internal Revenue Service issued Notice 2018-83 announcing the dollar limits and cost of living adjustments for pension and retirement plans for the 2019 tax year. A recap of these limits is below.

 20192018
401(k), 403{b), 457{b) Elective Deferrals; §402{g)$19,000$18,500
401(k), 403(b),457{b) Catch-Up Contribution (age 50+); §414{v){2)(B)(i)$6,000$6,000
SIMPLE 401{k) Elective Deferrals$19,000$18,500
SIMPLE 401{k) Catch-Up Contributions (age 50+);§414{v){2)(B)(i)$6,000$6,000
SIMPLE IRA Elective Deferrals; §408{p)(2)(C)$13,000$12,500
SIMPLE IRA Catch-Up Contributions {age SO+); 414{v){2){B)(ii)$3,000$3,000
SEP Minimum Compensation; §408{k){2){C)$600$600
IRA & Roth Contribution Limit; §219{b){S){A)$6,000$5,500
IRA & Roth Catch-Up Contributions (age 50+)$1,000$1,000
Annual Compensation Limit; Sections 401{a){17), 404(1), 408{k){3){C), and 408{k){6){D)(ii)$280,000$275,000
Maximum Annual Addition Defined Contribution Plans; §415(c){l){A)$56,000$55,000
Highly Compensated Employee; §414{q){l)(B)$125,000$120,000
Key Employee in a Top-Heavy Plan; §416{i){l)(A)(i)$180,000$175,000

Deductible IRA Contributions and Phase-Out Rules

If neither you nor your spouse is an active participant in a retirement plan at work, you can deduct contributions to an IRA on your tax return. However, if during the year either you or your spouse is an active participant in a retirement plan at work, the deductibility will depend on your tax filing status and subject to the following phase-out rules based on your income (under §219(g)(2)(A)).

Single or Head of Household and active participant in employer’s retirement plan: phase-out range $64,000 to $74,000 (increased from $63,000 to $73,000 in 2018).

Married Filing Joint or a Qualified Widow(er), spouse making IRA contribution and spouse is an active participant in employer’s retirement plan: phase-out range $103,000 to $123,000 (increased from $101,000 to $121,000 in 2018).

Married Filing Joint or a Qualified Widow(er), IRA contributor not an active participant in employer’s retirement plan but spouse is an active participant in their employer’s retirement plan: phase-out range is $193,000 to $203,000 (increased from $189,000 to $199,000 in 2018).

Married Filing Separate and active participant in employer’s retirement plan: phase-out remains the same as 2018 at $0 – $10,000.

Roth IRA Contributions Phase-Out Rules

Contributions to Roth IRA accounts are also subject to the following phase-out rules for all taxpayers based on your income (under §408A(c)(3)(A)).

Single and Head of Household: phase-out range $122,000 to $137,000 (increased from
$120,000 to $135,000 in 2018).

Married Filing Joint or a Qualified Widow(er): phase-out range $193,000 to $203,000 (increase from $189,000 to $199,000).

Married Filing Separate: phase-out range remains the same at $0 – $10,000

If you have more than one employer during the year, you will need to combine some of the limits listed above, such as the $19,000 401(k) Elective Deferral limit, whereas some of the limits are per employer. The information above should be used as a guideline in determining the maximum amount you can contribute to your retirement plan. Please be sure to consult your tax advisor to determine your personal contribution and phase-out limits.