Notice 2018-83 details that taxpayers can now generally contribute more money to their retirement funds as part of the cost-of-living adjustment guidance.
Changes for 2019
The contribution limit for employees participating in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is hiked from $18,500 to $19,000.
Annual contributions to an IRA are now capped at $6,000, up from the previous limit of $5,500. The additional catch-up contribution limit for individuals 50 years old and older remains at $1,000. It is not subject to the cost-of-living adjustment process.
Income ranges for determining a taxpayer’s eligibility to make deductible contributions to traditional IRAs, to contribute to Roth IRAs and to claim the Saver’s Credit also were increased for 2019.
Contributions to a traditional IRA are deductible if the taxpayer meets certain conditions. If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction could be reduced or phased out until it’s eliminated (depending on filing status and income). Phase-outs of the deduction won’t apply if neither partner is covered by a work retirement plan.
Here are the phase-out ranges for 2019 from the IRS:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is $64,000 to $74,000, up from $63,000 to $73,000.
- For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $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 is 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 phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The income phase-out range for taxpayers making contributions to a Roth IRA is $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 phase-out range is $193,000 to $203,000, up from $189,000 to $199,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to cost-of-living adjustment and remains $0 to $10,000.
The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $64,000 for married couples filing jointly, up from $63,000; $48,000 for heads of household, up from $47,250; and $32,000 for singles and married individuals filing separately, up from $31,500.
The catch-up contribution cap for employees 50 years old and older who participate in 401(k), 403(b), most 457 plans and the federal Thrift Savings Plan remains unchanged at $6,000.