IRS releases new retirement contribution limits for 2019

November 4, 2018 8:23 pm Published by Comments Off on IRS releases new retirement contribution limits for 2019

Summit Group Retirement Planners, Inc. – Retirement in America

IRS releases new retirement contribution limits for 2019

On November 01, 2018 the IRS announced cost of living adjustments that affected dollar limitations for pension plans and other retirement-related items for the 2019 tax year.  These increases were detailed in Notice 2018-83.  

 

How Much Can I save in 2019?

The IRS has increased the annual compensation limit for calculation purposes inside these retirement programs from $275,000 to $280,000 and has increased the threshold from Highly Compensated Employees (HCE) from $120,000 to $125,000.  The IRS also increased the Social Security wage base from $128,400 to $132,900. 

For employers offering a 401(k) plan, 403(b) plan, most 457 plans, the Federal Government’s Thrift Savings Plan, their employees will now be able to increase their savings from $18,500 to $19,000.  The catch-up deferral limit for employees that are over age 50, remains unchanged at $6,000 per year. 

With respect to defined contribution plan maximum annual additions, the aggregate increased from $55,000 to $56,000 ($62,000 including the catch-up for employees over age 50) in 2019.  The defined benefit plan maximum annual benefit increased from $220,000 to $225,000. 

Lastly, the contribution limits were also increased for IRA’s.  For SIMPLE IRA’s, the deferral limit was raised from $12,500 to $13,000.  The IRA contribution limit increased from $5,500 to $6,000.  The income ranges for determining eligibility to make IRA and ROTH IRA contributions also increased for phase-out purposes. 

IRA Phase-Outs

  • Single person covered by workplace retirement plan: the phase-out range is $64,000 -$74,000;
  • Married couple filing jointly where spouse making IRA contribution is covered by a workplace retirement plan: the phase-out range is $103,000 – $123,000;
  • Married couple filing jointly with no access to a workplace retirement plan: the phase-out range is $193,000 – $203,000; and
  • Married couple filing separately and covered by a workplace retirement plan: the phase-out range is not subject to an annual cost-of-living adjustment and remains 0 – $10,000.

ROTH IRA Phase-Outs

  • Single and heads of households: the phase-out range is $122,000 – $137,000;
  • Married couples filing jointly: the phase-out range is $193,000 – $203,000; and
  • Married individuals filing separately and making contributions to a ROTH IRA is not subject to an annual cost-of-living adjustment and remains 0 – $10,000.

Key Takeaways

          For hardworking Americans, the new IRS contribution limits provide an opportunity to increase deferrals into their workplace retirement programs or into their IRA’s.  As professional retirement plan specialists consulting with employees on an ongoing basis, reducing debt and building a savings strategy that is appropriate for those individuals and their families is very important to us both now and in the future.  Please consider speaking with a Certified Public Account (CPA) with your tax questions, and happy saving!         

 

Further Reading

For further information, please contact Summit Group Retirement Planners, Inc. Representative: 267-433-1051 or Dfiorenza@sgretirementplanners.com.  Summit Group Retirement Planners, Inc. specializes on collaborating with employers on the design, installation, and ongoing servicing needs of their retirement programs. 

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Author: Derek Fiorenza – COO/CCO Summit Group Retirement Planners, Inc.

References

https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19000-for-2019-ira-limit-increases-to-6000


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This post was written by Tiffany Bellamy

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