Savings Contribution Limits Go Up

by Murray Coleman - Thursday, 20 December, 2018

The beginning of the year is a great time to remind investors of the contribution limits for various savings vehicles in order for them to maximize their tax-preferential savings and avoiding, what can be, costly penalties.

Contribution limits for 2019 for various accounts are set to rise, according to the IRS. The specifics of such inflation adjustments are listed below:

Account

Contribution Limit

Catch-Up Contribution

IRAs and Roth IRAs

$6,000

$1,000

401(k), 403(b), 457 plans, SARSEPs

$19,000 in elective deferrals

$6,000

SIMPLE Plans

$13,000

$3,000

SEP IRAs

Lesser of $56,000 or 25% of total compensation

None

HSA Account

Single: $3,500 Family: $7,000

$1,000

 

Please note that catch-up contributions only apply to individuals who are age 50 or older for IRAs, Roth IRAs, 401(k), 403(b), 457 plans, SARSEPs, and SIMPLE Plans and age 55 or older for HSA accounts.

Also note there is an IRA deduction phase-out for those who are active participants in an employer-sponsored retirement plan, which are the following:

  • If you are Single, Head of Household, or Married Filing Separately (and you did not live with your spouse at any time during the year):
    • If MAGI is <$64,000, you can have a full deduction up to the amount of your contribution limit.
    • If MAGI is > $64,000 but < $74,000, your deduction is reduced. See IRS Publication 590-A to calculate your reduced amount.
    • If MAGI is > $74,000, no deduction is allowed.
  • If you are Married Filing Jointly or Qualifying Widow(er): 
    • If MAGI is <$103,000, you can have a full deduction up to contribution limit.
    • If MAGI is > $103,000 but < $123,000, your deduction is reduced. See Publication 590-A to calculate your reduced amount.
    • If MAGI is > $123,000, no deduction is allowed
  • If you are Married Filing Separately (and you lived with your spouse):
    • If MAGI is < $10,000, your deduction is reduced. See Publication 590-A to calculate your reduced amount.
    • If MAGI is > $10,000, no deduction is allowed
  • If you are a non-active participant married to an active participant: 
    • If MAGI is <$193,000, you can have a full deduction up to your contribution limit.
    • If MAGI is > $193,000 but < $203,000, your deduction is reduced. See Publication 590-A to calculate your reduced amount.
    • If MAGI is > $203,000, no deduction is allowed.

Also, note that there is a Roth IRA phase-out depending on your Modified Adjusted Gross Income (MAGI):

  • If you are single, head of household or married filing separately (and do not live with a spouse):
    • If MAGI is <$122,000, you can contribute up to the limit.
    • If MAGI is > (or =) $122,000 but < $137,000, your contribution limit is reduced. See Publication 590-A to calculate your reduced amount.
    • If MAGI is > (or =) $137,000, you cannot make a contribution to a Roth IRA.
  • If you are married filing jointly or qualifying widow(er): 
    • If MAGI is <$193,000, you can contribute up to the limit.
    • If MAGI is > $193,000 but < $203,000, your contribution limit is reduced. See Publication 590-A to calculate your reduced amount.
    • If MAGI is > (or =) $203,000, you cannot make a contribution to a Roth IRA.
  • If you are married filing separately and you live with your spouse:
    • If MAGI is $0, you can contribute up to the limit.
    • If MAGI is > $0 but < $10,000, your contribution limit is reduced. See Publication 590-A to calculate your reduced amount.
    • If MAGI is > (or =) $10,000, you cannot make a contribution to a Roth IRA.