Your New Year’s Resolution? Max out 2019 IRA and other Retirement Plan Contribution Limits

Posted:  Monday, December 3, 2018 - 1:30pm
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About this blog:

  • Sarah Ruef-Lindquist, JD, CTFA

    Sarah believes sound, thoughtful planning is a gift we give ourselves, our families and our community.

    She is a lawyer and seasoned non-profit executive who has worked with dozens of organizations, individuals and families as a philanthropic advisor and senior trust officer. She holds the Certified Trust and Financial Advisor certification and FINRA Series 7 and 66 registrations through Commonwealth Financial Network. Sarah and her husband live in Camden. The Financial Advisors of Allen and Insurance Financial are Registered Representatives and Investment Adviser Representatives with/and offer securities and advisory services through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Allen Insurance and Financial, 31 Chestnut Street, Camden, ME 04843. 207-236-8376.

The elimination of most pension plans, also known as “defined benefit” plans over the past 40 years has meant most working people must exercise some discipline to save for their own retirement and/or participate in plans like the 401(k), often an employer-sponsored plan, also known as “defined contribution” plans.

According to the US Department of Labor, between 1975 and 2014, the number of defined benefit (more commonly called ‘pension’ ) plans in the private sector fell by 57% while the number of defined contribution plans increased by 208%. Limitations on what people can contribute annually to those plans has been static for five years. The amount of money people could contribute to their retirement plans with “pre-tax” dollars as of 2018 has not increased since 2013. However, the IRS has recently announced new limits on retirement plan contributions beginning in 2019.

If you haven’t in past years, make 2019 the year you “max out” your contributions limits, saving more than before, and plan for your retirement future.

We will review the changes by types of plans:

IRA’s: For those under age 50, $6,000 may be contributed to an IRA, and for those 50 and older a $1,000 catch-up amount is also allowed for a total of $7,000.

ROTH IRA contributions are phased out at higher levels, too. For single and head of household taxpayers, the amount is phased out between $122,000 - $137,000of Adjusted Gross Income

(AGI). For married filing jointly the phase-out range is $193,000 to $203,000.

SIMPLE Plan contribution limits will be $13,000 with an additional $3,000 catch-up for those 50 and older.

401(k), 403(b) and most 457 Plans will have contribution limits of $19,000, with an additional $6,000 catch-up for those 50 and older.

2019 Retirement Plan Types

Amount of 2019 Limit

Age 50+ “catch-up”

IRA

$ 6,000

$1,000

SIMPLE IRA

$ 13,000

$3,000

401(k), 403(b) and 457 Plans

$ 19,000

$6,000

Defined Benefit Plan 415(b)(1)(A)

$225,000

 

Defined Contrib. 415(c)(1)(A)

$ 56,000

 

ROTH PHASE-OUT Single

ROTH PHASE-OUT Married Filing Jointly

$120,000 - $137,000

 

$193,000 - $203,000