Great news retirement savers: The Internal Revenue Service announced cost of living increases to the contribution limits for retirement-related plans in 2019.
Annual contribution limits to 401(k)s will increase to $19,000 coming from $18,500.
as well as the annual contribution to an IRA, last increased in 2013, rises to $6,000 coming from $5,500.
“This kind of is actually another win for investors as well as savers,” says Stephanie Bacak, a financial planner at Capstone Global Advisors. “For so long there were actually no cost of living increases inside the IRA so the item is actually a great opportunity for so many to be more prepared for retirement.”
Catch-up contributions, available to those age 50 as well as over, will remain unchanged at $6,000 for 401(k)s as well as $1,000 for IRAs.
In addition to 401(k)s, limits for 403(b)s, most 457 plans as well as the federal government’s Thrift Savings Plan will also increase to $19,000.
Also rising next year are the income ranges which determine eligibility for deductible contributions to IRAs, to Roth IRAs, as well as to claim the saver’s credit.
For example, the income phase-out range for taxpayers generating contributions to a Roth IRA increased to $122,000 to $137,000 for singles as well as heads of household, up coming from $0,000 to $135,000. For married couples filing jointly, the income phase-out range is actually $193,000 to $203,000, up coming from $189,000 to $199,000.
The IRS increases are helpful, says Shane Mason, certified financial planner at Brooklyn FI, yet only if you are able to make the maximum contribution.
He says those who want to continue to max out their 401(k) should revisit their contributions to make sure they’re putting in enough with each paycheck.
Those which are paid semi-monthly (twice a month or 24 times a year) should be contributing $792 per paycheck as well as those paid biweekly (every two weeks or 26 times a year) should be contributing $731 per paycheck.
CNNMoney (fresh York) First published November 1, 2018: 4:50 PM ET