New 2019 Contribution Limits!
If you contribute to a retirement account, then you should be interested to know that the IRS has increased the contribution limits for 2019. You may also be interested in knowing any restrictions on your ability to contribute. Lastly, did you know that once you reach the age of 50 you are usually allowed to make an additional contribution? This is known as a catch-up contribution.
Contribution Limits
Account Type |
2018 |
2019 |
| IRA or Roth IRA | $5,500 | $6,000 |
| IRA or Roth IRA over age 50 | $6,500 | $7,000 |
| 401(k) | $18,500 | $19,000 |
| 401(k) over age 50 | $24,500 | $25,000 |
| 403(b) | $18,500 | $19,000 |
| 403(b) over age 50 | $24,500 | $25,000 |
401(k) and 403(b) Eligibility
Anyone who is eligible and enrolled in the plan can contribute. The eligibility and enrollment process will vary by employer but is typically covered during the on-boarding process upon being hired. If you have any questions about getting enrolled in your employer’s plan contact your HR department.
IRA Eligibility and Deductibility
Anyone with earned income can contribute up to the IRS limit (above) or their earned income amount, whichever is lower. However, tax deductibility can vary. The first consideration is whether a taxpayer, or their spouse, is covered by a retirement plan at work. If not, then IRA contributions are fully deductible. If a taxpayer, or their spouse, is covered by a plan at work, then their income (as measured by modified adjusted gross income, or MAGI) will determine deductibility, and the income level is subject to phase-out ranges. Here are phase-out ranges:
Tax Filing Status |
2018 Phase-out Range (MAGI) |
2019 Phase-out Range (MAGI) |
| Single (covered by work plan) | $63,000-$73,000 | $64,000-$74,000 |
| Married Filing Joint (for spouse covered by work plan) | $101,000-$121,000 | $103,00-$123,000 |
| Married Filing Joint (for spouse NOT covered by work plan) | $189,000-$199,000 | $193,000-$203,000 |
| Married Filing Separately (covered by a work plan) | $0-$10,000 | $0-$10,000 |
How do the phase-out ranges work? If the taxpayer’s income (or their combined income if married) is below the income range then they can fully deduct their IRA contribution. If their income falls within the phase-out range then they can partially deduct their contribution. And if their income is above the range then no deduction is available. For more detail on this, you can check on the IRS website page that explains it HERE.
Roth IRA Eligibility
Similar to an IRA, anyone with earned income is eligible, but contributions are only allowed if income is below a certain level. Like IRA deductibility, Roth IRA contributions are subject to phase-out ranges. If income falls below the range then a full Roth IRA contribution is allowed. If income falls within the phase-out range then a partial contribution is allowed. And finally, if income is above the phase-out ranges then no contribution is allowed. Here are the phase-out ranges:
Tax Filing Status |
2018 Phase-out Range (MAGI) |
2019 Phase-out Range (MAGI) |
| Single | $120,000-$135,000 | $122,000-$137,000 |
| Married Filing Jointly | $189,000-$199,000 | $193,000-$203,000 |
| Married Filing Separately | $0-$10,000 | $0-$10,000 |
We have only covered IRAs, Roth IRAs, 401(k)s and 403(b)s thus far. There are several other types of retirement plans out there such as a SEP IRAs, SIMPLE IRAs, Solo 401(k)s to name a few. If you have questions about other types or want to discuss in further detail give us a call or email us. We’d be happy to talk with you.
Happy New Year!