Are you ready to save more for retirement this year than last?
If one of your new year’s resolutions is to save more for retirement in 2019, then I have some GREAT news for you!
Did you know the IRS announced in November that the limit on contributions made to retirement savings accounts would be increased for 2019?
For 2019, the annual contribution limit for defined contribution plans (retirement savings plans in which the employer, employee or both make contributions on a regular basis) increases from $18,500 to $19,000. This includes 401(k) plans, 403(b) plans, and most 457 plans, which allow for pre-tax salary-reduction contributions and tax-deferred growth of investment earnings. Additionally, if you are over the age of 50 – or will be by December 31, 2019, you can make an extra catch-up contribution of $6,000.
If your employer allows after-tax contributions (or if you are self-employed), you will be able to save even more. The limit for total contributions from both employee and employer to defined contribution plans increases from $55,000 to $56,000 in 2019.
The IRS also announced increases in contribution limits for IRAs, or Individual Retirement Accounts.
The annual contribution limit to an IRA, traditional or Roth, increases from $5,500 to $6,000 in 2019. If a participant is over the age of 50, he or she is also eligible to make a catch-up contribution of an additional $1,000 to his or her IRA on an annual basis.
And remember! You can continue to make 2018 IRA contributions until Tax Day on April 15, 2019. (Just be sure to indicate which tax year you are making contributions for on any checks.)
So what does all this mean?
If you are a diligent saver, you will be able to contribute as much as $25,000 in these tax-advantaged accounts in 2019. (That’s an increase of $1,000 from 2018.) If you are over the age of 50 and making catch-up contributions, you can contribute as much as $32,000.
Have a question about making contributions to your retirement savings plan? Or want to learn more about setting up a retirement savings account? Give us a call at Personal Financial Strategies to see how we can help you and your family save for retirement.
For greater technical guidance on the 2019 limitation adjustments, please see the IRS Notice 2018-83.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
This information is not intended to be a substitute for specific tax advice. Tax services are not offered by Personal Financial Strategies, LPL Financial or affiliated advisors. We suggest that you discuss specific tax issues with a qualified tax advisor.
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