Washington Post, Nov 5, 2018
The IRS has announced cost-of-living adjustments that affect workplace retirement plans.
The threshold for workers who contribute to employer-sponsored 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan will increase to $19,000, up from $18,500.
The catch-up contribution limit for employees 50 and older who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan will remain at $6,000.
The yearly limit for IRA contributions will also get a boost to $6,000, up from $5,500. The catch-up contribution limit for individuals 50 and older will remain at $1,000. So, if you’re 50 or older in 2019 you can contribute $7,000.
Read more: What’s your retirement readiness score?
The income limits to be able to deduct contributions to a traditional IRA are also increasing. Here are the phaseout ranges for 2019, according to the IRS:
— Single taxpayers covered by a workplace retirement plan is now $64,000 to $74,000, up from $63,000 to $73,000.
— Married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, $103,000 to $123,000, up from $101,000 to $121,000.
— For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income will be between $193,000 and $203,000, up from $189,000 and $199,000.
— For a married individual filing a separate return who is covered by a workplace retirement plan, the phaseout range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The income limits for the Roth IRA will be $122,000 to $137,000 for singles and heads of household, up from $120,000 to $135,000. For married couples filing jointly, the income range will be $193,000 to $203,000, up from $189,000 to $199,000.
The cost-of-living increases for these retirement plans is a good move. But the reality is that most Americans don’t come close to maxing out their workplace plans. Many aren’t contributing anything.
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