The IRS has released 2019 cost-of-living adjustments, resulting in increases to annual deferral limits for retirement accounts.
The IRS has released 2019 cost-of-living adjustments, resulting in increases to annual deferral limits for retirement accounts. Below is a list of the changes:
The annual contribution will increase from $5,500 to $6,000 in 2019. The additional catch up contribution for those over 50 remain at $1,000 for a total of $7,000. Anyone with earned income can contribute to a traditional IRA however their contributions may not be deductible. If you are making a non-deductible contribution you may want to consider a back-door Roth IRA. Below are the limits to determine if they are fully deductible, partially deductible, or non-deductible if you are covered by a retirement plan at work. Please remember to consult your tax preparer.
|Deduction||Single||Married filing jointly|
|Full||$64,000 or less||$103,000 or less|
|Partial; deduction begins to phase out||More than $64,000 and less than $74,000||More than $103,000 and less than $123,000|
|Non-deductible||Above $74,000||Above $123,000|
If you are not covered by a plan at work here are the income limits:
|Deduction||Single and married filing jointly (neither spouse covered)||Married filing jointly – one spouse covered|
|Full||Any||$193,000 or less|
|Partial; deduction begins to phase out||More than $193,000 and less than $203,000|
Roth IRAs will also see an increase of $500 to $6,000 with a $1,000 catch up contribution for a total of $7,000 in 2019. The income phase-out range is also increasing to $122,000-$137,000 for single filers and $193,000-$203,000 for joint.
Defined Contribution Plans
The contribution limits for 401(k)s, 403(b)s, and most 457 plans have increased from $18,500 to $19,000 in 2019. Employees over 50 will be eligible for a catch-up contribution of $6,000 in 2019 for a total of $25,000.
The contribution for simplified employee pension plans will increase from $55,000 to $56,000 in 2019.
Simple IRA’s and Simple 401(k)s
If you are not participating in another retirement plan, the max contributions to these plans in 2019 will increase by $500 to $13,000.
If you have any questions about these changes or would like to discuss increasing your 2019 retirement contributions, please feel free to contact one of our advisors.
The Pension Protection Act of 2006 single-handedly created target date funds as a global asset class, one which now commands a 20% to 25% share among public and corporate pension plans. In the United States, more than $2.5 trillion is invested in these types of funds by approximately 40 million people.
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