IRS Reveals 401k, IRA Contribution Limits For 2019

401k, retirement, IRS, contribution limits

IRS building in Washington, D.C.

The Internal Revenue Service announced Thursday that it will raise contribution limits for employees who participate in 401k, 403b, most 457 plans, as well as the federal government’s Thrift Savings Plan, from $18,500 in 2018 to $19,000.

Limit increases are calculated annually according to inflation rates and take effect January 1.

“Based on Betterment for Business analysis, over roughly 30 years, that extra $500 can equate to $41,900.84 at a 6 percent rate of return. Taxpayers who are on the fence about increasing their contributions should see this as a great opportunity for a long-term investment in their retirement savings,” Eric Bronnenkant, head of Tax at Betterment for Business, told 401(k) Specialist in an interview.

Participants 50 and older looking to play catch-up and stash away more can save an additional $6,000 in 2019 (the same amount as last year).

For employees without access to workplace retirement plans, the cap on Individual Retirement Accounts (IRAs) has finally gone up, as well. The new max is $6,000, compared to $5,500—an amount that had been in place since 2013.

The annual catch-up contribution for IRA savers age 50 and older, however, remains unchanged at $1,000.

The IRS issued technical guidance detailing these items in Notice 2018-83.

Phase-out ranges were updated for 2019, as well.

IRA deductions:

Roth IRA deductions:

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