The new year is underway, and you might be wondering about the retirement contribution limits for 2019. Because of cost-of-living adjustments (COLA), the dollar limitations for investing in pension plans and other retirement programs for the new year were adjusted accordingly.
The laws allow you to save as much as $19,000 in your 401(k) this year, which is a $500 increase over last year. For individual retirement accounts, your limit is $6,000, which is also a $500 increase over last year. These limits also apply to 403(b), Thrift Savings, and many 457 plans.
CNBC recently reported that the average balance of an American worker’s 401(k) account is $104,000. If you are age 50 or older, your limits for catching up contributions have remained unchanged. Those figures are an additional $6,000 for 401(k) and other employee-based retirement plans, while it is an additional $1,000 for IRAs.
Taxpayer Deductions to Traditional IRA Accounts
If certain requirements are met, a taxpayer is entitled to deduct contributions to their traditional IRA. If the taxpayer or his or her spouse was covered through a workplace retirement plan sometime during the year, the deduction might be phased out or reduced until it is eliminated, which is dependent on the individual’s income and filing status.
If the taxpayer nor his or her spouse is covered by an employer retirement plan, the phase-outs of tax deductions aren’t applicable. Here are the 2019 ranges for phasing out deductions:
- A single taxpayer covered by a retirement plan at their workplace will see a $1,000 increase in the phase-out range with it going up to incomes ranging from $64,000 to $74,000.
- For couples who are married and file jointly, if the spouse that contributes to the IRA has a workplace retirement plan, the phase-out range increases to $103,000 to $123,000, which is up from the prior year’s income limits of $101,000 to $121,000.
- For an individual contributing to an IRA contributor who isn’t covered by a retirement plan from the employer and whose spouse is covered by a workplace retirement plan, the deduction will phase out if the income for the couple ranges from $193,000 to $203,000, which is a higher income limit from the prior year’s $189,000 to $199,000.
- For an individual who is married but filing separately and who has a workplace retirement plan, the range for phasing out deductions isn’t affected by the annual COLA and it remains from no income to $10,000.
Phase-Outs for Other Retirement Plans
The income-phase out range for those who are contributing to a Roth IRA ranges from $122,000 to $137,000 for those who file as single or head of household, which is an increase from $120,000 to $135,000. For jointly filing married couples, the income range where phase-outs take place are from $193,000 to $203,000, which is up from the previous year’s $189,000 to $199,000. The phase-out income range for an individual who is married filing separately who contributes to a Roth IRA isn’t subject to the annual COLA and stays from zero to $10,000.
The income limit established for what is called the Saver’s Credit or Retirement Savings Contributions Credit, for workers with a low-to-moderate-income is $64,000 for couples who are married and filing jointly, which is up $1,000 over the previous year. Those filing head of household have a $48,000 range which is up from the $47,250 limit, and the limit is up $500 to $32,000 for singles and those who are married filing separately.
Get Your Retirement On Track
To learn more about how to maximize your retirement savings and your deductions, contact MKS&H CPAs and Business Consultants. With two locations to serve you, call the Hunt Valley location at (410) 296-6200 or the Frederick location at (301) 662-7913 today.