IRS Announces Contribution Limit Increases for Retirement Accounts

Home » Money Management » Personal Finance » IRS Announces Contribution Limit Increases for Retirement Accounts

IRS Announces Contribution Limit Increases for Retirement Accounts

With the end of 2018 now fast approaching, today the Internal Revenue Service (IRS) announced 2019 contribution limits for various retirement accounts. In many cases these limits have increased as part of what the IRS calls “cost of living adjustments.” As a result individuals will be able to put away more of their savings in individuals retirement arrangements (IRAs), 401(k)s, and other accounts.

Perhaps the most notable change for 2019 is that the annual contribution limit for IRAs will increase from the current $5,500 to $6,000. This actually marks the first contribution increase seen since 2013. Meanwhile the $1,000 catch-up contribution limit — which comes in addition to the regular limit for those 50 years of age or older — will remain the same. As for Roth IRAs, adjusted gross income limitations are also set to rise in 2019, coming in at $193,000 for married couples filing jointly — up from $189,000 this year. Similarly the Roth IRA AGI limitation for singles, heads of households, or those married filing separately will increase to $122,000, up from $120,000.

Other types of retirement accounts such as 401(k)s, 403(b)s, most 457 plans, and the Thrift Savings Plan will also see a $500 contribution limit increase next year. This will bring the annual limits for these accounts from $18,500 to $19,000. For the record, unlike IRA limits which stayed stagnant for half a decade, this marks the second straight year of increased limits among these types of accounts. Also increasing is the total plan contribution limit, rising from $55,000 to $56,000. Lastly, once again the catch-up contribution limit for those 50+ will remain at the same $6,000 for 2019.

Another set of changes comes to the Retirement Savings Contributions Credit; known simply as the Saver’s Credit. This program allows individuals and couples with incomes below a certain threshold to earn a credit for up to 50% of their retirement account contributions. For 2019 the income limit to qualify for any Saver’s Credit will increase from $63,000 for married couples filing jointly to $64,000 while the limit for heads of households rising from $47,250 to $48,000 and the limit for singles or that married filing separately climbs from $31,500 to $32,000.

Overall the newly-announced 2019 retirement account contribution limits are good news for savers looking to sock as much away for their retirement as possible. Unfortunately most Americans won’t come close to these maximums. As Forbes notes, in 2017, merely 13% of workers with retirement accounts reached their 401(k) contribution limits, while only 14% of those over 50 took advantage of catch-up contribution limits. In other words, if you’re starting to plan out your New Year’s Resolutions for 2019, considering making “max out your retirement savings” a priority in order to take advantage of these increased limits.

Comments

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Chase Introduces New Checkless Accounts with Lower Fees

It may be surprising to some but, according to a 2017 Federal Deposit Insurance Corporation (FDIC) report, 6.5% of households in the United States don’t have a traditional bank account. There are many reasons why Americans are unbanked but, anecdotally, rising fees are among the biggest reasons for what's keeping...

Despite Recent Dip, Housing Market Looks for Spring Uptick

Winter has never been a popular time to buy to home but a recent dip did have some economists concerned. In January home sales fell 1.2% from the prior month, leading some to ponder whether it was a sign of a larger slowdown. However, as CNN Business reports, analysts have...

Tally Introducing Free Automated Savings Service

Something that often gets lost in all the talk and controversy surrounding FinTech is that many of the companies wearing that label aim to improve the financial lives of their users, not hurt them. From making investing more accessible to giving consumers more effective tools for getting out of debt,...