The new year will bring an opportunity for greater retirement savings as the IRS increased the contribution limits for many retirement plans for 2019. On November 1, 2018, the IRS issued Notice 2018-83 which provides the technical guidance to changes in contribution limits. We have outlined some of the most common contribution types and their changes below:
401(k)s: The contribution limit for employees who participate in a 401(k), 403(b) and most 457 plans, as well as the federal government's Thrift Savings Plan, is increased from $18,500 to $19,000.
401(k) Catch-Up: The additional catch-up contribution limit for individuals 50 and older remains $6,000. Even if you don’t turn 50 until December 31, 2019, you can make the additional $6,000 catch-up contribution for the year.
IRAs: The limit on annual contributions to an IRA, which last increased in 2013, rose from $5,500 to $6,000.
IRA Catch-Up: The catch-up contribution limit remains at $1,000.
Defined Benefit Plan: The benefit limitation increases from $220,000 to $225,000 for these individual pension plans.
In 2019, individuals age 50-plus who prioritize saving can contribute a total of $32,000 on a pre-tax basis to a qualified defined contribution plan and personal IRA. In addition, if their employer allows after tax contributions within their retirement plan or they are self-employed, they can save even more with the overall defined contribution limit increasing from $55,000 to $56,000.
If you have questions about how to max out your retirement contributions or would are interested in an assessment of your retirement savings, please contact our Retirement Plan Advisory Team today.
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