Good news for retirement savers: The IRS announced a 2019 contribution limit to retirement-related plans that raised the cost of living.
The annual contribution limit for 401(k)s will increase from $18,500 to $19,000.
Annual contributions to an IRA were last increased in 2013, from $5,500 to $6,000.
“This is another win for investors and savers,” said Stephanie Bacak, a financial planner at Capstone Global Advisors. “The IRA cost of living has really not increased in a long time, so this is a great opportunity for many people to be better prepared for retirement.”
The catch-up contributions available to those 50 and older will remain the same at $6,000 for 401(k)s and $1,000 for IRAs.
In addition to 401(k)s, the limit for 403(b)s, most 457 plans and the federal government’s Thrift Savings Plan will also increase to $19,000.
Next year will also raise the income ranges that determine eligibility for deductible contributions to IRAs, Roth IRAs and require savers to take credit.
For example, the income phase-out range for taxpayer contributions to a Roth IRA increases from $120,000 to $122,000 to $137,000, and from $120,000 to $135,000 for singles and heads of household. For married couples filing jointly, the phase-out income range is $193,000 to $203,000, up from $189,000 to $199,000.
Shane Mason, a certified financial planner in Brooklyn FI, says the addition of the IRS can help, but only if you can make the most of your contribution.
Those who want to continue maxing out their 401(k)s should review their contributions to make sure they’re putting in enough money with each paycheck, he said.
Those who receive semimonthly (twice a month or 24 per year) pay $792 per paycheck, and those who receive biweekly (every two weeks or 26 per year) pay $731 per paycheck.
CNNMoney (New York) First published Nov 1, 2018: 4:50pm ET