Increases In Retirement Plan Contributions and More for 2019

 

Most IRA and retirement plan limits increase for 2019. On November 1, 2018, the IRS announced the 2019 IRA and retirement plan limits. Many of the key limits are increasing for 2019, including the IRA contribution limit and the employer-sponsored retirement plan deferral limit. Several other IRA and retirement plan limits increase for 2019, as well as the IRA and retirement plan contribution tax credit—the “saver’s credit”—income amounts.

TRADITIONAL AND ROTH IRAS

The IRA contribution limit increases to $6,000. The catch-up amount for individuals age 50 and older remains at $1,000. Both of the modified adjusted gross income (MAGI) limits for Traditional IRA contribution deductibility and for Roth IRA contribution eligibility increased.

Traditional IRA Deductibility MAGI Phase-Out Ranges

Charts provided by Ascensus, LLC. Used with permission.

Charts provided by Ascensus, LLC. Used with permission.

Roth IRA Contribution MAGI Phase-Out Ranges

Roth IRA Contribution MAGI Phase-Out Ranges .png

EMPLOYER-SPONSORED RETIREMENT PLANS

The 401(k) salary deferral limit increased to $19,000. The catch-up amount for individuals age 50 and older remains at $6,000.

The following is a list of key 2019 limits that affect defined contribution plans (e.g., 401(k) plans), defined benefit plans, 403(b) plans, governmental 457(b) plans, simplified employee pension (SEP) plans, and savings incentive match plans for employees of small employers (SIMPLE) IRA plans.

2019 Retirement Plan Limits.png

CONTRIBUTION TAX CREDIT

The adjusted gross income limits associated with the saver’s tax credit for IRA contributions and deferrals in retirement plans increases. The adjusted gross income definition can be found in IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs).

2019 Adjusted Gross Income.png

Also, the charitable tax break for IRA owners age 70 ½ or older allows you to transfer up to $100,000 per year from your Traditional IRA directly to charity. These charitable transfers count as part of your required minimum distribution (RMD). This strategy allows for tax savings because of higher standard deduction limits introduced in 2018. Additionally, there are tax benefits with a charitable gift annuity (CGA). If you still plan on itemizing your deductions, you can claim a federal income tax charitable deduction for a portion of the amount transferred to the charity in exchange for a gift annuity. For more information or to request an age illustration customized for you, please visit our Charitable Gift Annuities page or contact us at service@orchardalliance.org.

 
Rob Pease