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.