Retirement contribution limits will rise in 2019


Good news for retirement savers: The Internal Revenue Service announced a cost-of-living increase in contribution limits for retirement-related plans in 2019.

Annual contribution limits to 401(k)s will increase from $18,500 to $19,000.

And the annual contribution to an IRA, last increased in 2013, increases from $5,500 to $6,000.

“This is another win for investors and savers,” says Stephanie Bacak, financial planner at Capstone Global Advisors. “For so long, there have been no cost of living increases in the IRA, so this is a great opportunity for many people to better prepare for retirement.”

Catch-up contributions, available to those age 50 and older, will remain unchanged at $6,000 for 401(k)s and $1,000 for IRAs.

In addition to 401(k)s, the limits for 403(b)s, most 457 plans and the federal Thrift Savings Plan will also increase to $19,000.

The income ranges that determine eligibility for deductible contributions to IRAs, Roth IRAs and the Saver's Credit Claim will also increase next year.

For example, the income phase-out range for taxpayers contributing to a Roth IRA increased from $122,000 to $137,000 for singles and heads of household, from $120,000 to $135,000. For married couples filing jointly, the income phaseout range is $193,000 to $203,000, an increase from $189,000 to $199,000.

IRS increases are helpful, says Shane Mason, certified financial planner at Brooklyn FI, but only if you're able to make the maximum contribution.

He says those who want to continue maxing out their 401(k) should review their contributions to make sure they're contributing enough with each paycheck.

Those paid biweekly (bimonthly or 24 times a year) should contribute $792 per paycheck and those paid biweekly (every two weeks or 26 times a year) should contribute $731 per paycheck .

CNNMoney (New York) First published November 1, 2018: 4:50 p.m. ET



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