With April 15 fast approaching, it is time to complete IRA contributions for 2018, and also to look at retirement plan contributions for 2019. This year, for the first time since 2013, the limits for contributions are increasing almost across the board, with only catch up limits remaining unchanged.
For 2018, IRA contributions must be completed by April 15, 2019. Contribution limit is $5,500, with $1,000 catch-up contribution for those age 50 or older. Roth IRA eligibility begins to phase out for those with modified AGI above $120,000/$189,000 (single / married filing jointly), but it is permissible to contribute to a traditional IRA, then roll over some or all of the traditional IRA into a Roth IRA. This rollover may result in tax consequences – any pre-tax contributions rolled over will be taxed as regular income.
For 2019, individual contribution limits are increased to $6,000 for IRAs, $13,000 for SIMPLE plans, and $19,000 for 401k plans. Catch up amounts remain the same at $1,000 for IRAs, $3,000 for SIMPLE plans, and $6,000 for 401k plans.
Income limits for eligibility of contributions and amounts that are deductible are also increasing. Of note, Roth IRA contributions begin to be phased out at $122,000/$193,000 (single / married filing jointly).
Employer contribution limits have also increased. Total contribution limit is $56,000 for 2019. Note that employers cannot deduct amounts exceeding 25% of employee compensation. SIMPLE plans have lower limits.
For additional information, refer to the IRS website: https://www.irs.gov/retirement-plans
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