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2019 is almost here! And with every new year, retirement account holders wonder what cost-of-living adjustments will be made to their account types. So, with that in mind, let’s briefly go over the changes for this new year.
While we saw few changes in recent years, you will see multiple cost-of-living adjustments to retirement plan limits in 2019.
Many limits increase next year, including IRA and employer plan contribution limits. Traditional IRA and Roth IRA contribution limits will increase to $6,000. However, the additional $1,000 in “catch-up” contributions for those 50 or over is unchanged. Remember that these limits do not apply to rollover or transfer amounts.
Also, the modified adjusted gross income (MAGI) phase-out ranges for Traditional IRA contribution deductibility and Roth IRA contribution eligibility will increase. For Traditional IRA deductibility, the MAGI phase-out ranges for 2019 are as follows:
- Single filer who is an active participant: $64,000-$74,000
- Married active participant filing a joint return: $103,000-$123,000
- Married active participant filing a separate return: $0-$10,000 (no change)
- Filer is the spouse of an active participant: $193,000-$203,000
And for Roth IRA contribution eligibility, the MAGI phase-out ranges for 2019 are
- Single filer: $122,000-$137,000
- Married individual filing a joint return: $193,000-$203,000
- Married individual filing a separate return: $0-$10,000 (no change)
The annual contribution limit for simplified employee pension (SEP) plans will increase to $56,000 in 2019. The minimum compensation amount for SEP plans remains at $600, though. Savings Incentive Match Plans for Employers (SIMPLE) IRAs will see contribution limits increase to $13,000. Additionally, the catch-up contribution limit for SIMPLE plans will increase to $3,000.
In fact, employer-sponsored retirement plans will also see various changes to their limits in 2019.
The following are other key limits affecting defined-contribution plans, defined-benefit plans, governmental plans, and the aforementioned SEP and SIMPLE plans:
- Annual contribution limit: $56,000
- Catch-up contribution limit for retirement plans: $6,000 (unchanged)
- Compensation cap: $280,000
- Defined benefit limit: $225,000
- Highly-compensated employee (HCE): $125,000
- Key employee amount: $180,000
- Qualified longevity annuity contract (QLAC) limit: $130,000
- Salary deferral limit (IRC 402[g]): $19,000
- Social Security taxable wage base: $132,900
The adjusted gross income (AGI) limits for the Saver’s Credit for IRA contributions and deferrals in retirement plans also increase in 2019. The new limit for low- and moderate-income workers is $64,000 for married couples filing jointly; $48,000 for heads of household; and $32,000 for single filers and married individuals filing separately.
Remember that you can make IRA contributions for the 2018 tax year up to the 2019 tax filing deadline. If you do, ensure you designate the tax year for which you are contributing on the deposit form.
It’s important to stay up-to-date on changes like this so you’re aware of how they might affect your retirement savings. For more on this topic, read the IRS press release highlighting all of 2019’s changes.