In what is likely to be considered an unfamiliar statement, we have good news from the IRS today. Those of us hoping to throw a little extra cash toward our retirement savings next year, now officially can, with the announcement of new 401(k) and IRA contribution limits.
Every year around this time, the IRS makes a similar announcement detailing the updates for contribution limits and income thresholds. And for 2019, today is that day. According to the IRS, these increases are in response to “cost of living adjustments” and are effective for the 2019 tax year starting on January 1, 2019.
Here are a few highlights you’ll be interested in:
Highlights of the New 401(k) and IRA Contribution Limits
- Increase in 401 (k) 403(b), most 457 plans and the federal Thrift Savings Plan to $19,000
- Increase in contribution limit for IRAs to $6,000
- Changes to phase-out ranges for IRAs
- Changes to phase-out ranges for Roth IRAs
- Change in the income limit for the Saver’s Credit for low- and moderate-income workers
From the IRS press release:
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2019:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is $64,000 to $74,000, up from $63,000 to $73,000.
- For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $103,000 to $123,000, up from $101,000 to $121,000.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $193,000 and $203,000, up from $189,000 and $199,000.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
Is this good news for you? Share your thoughts in the comments below.