2019 401k Max Contribution – Financial Planning Florida
The IRS announced the 2019 cost-of-living adjustments made to contribution limits and income thresholds for retirement plans.
This year, cost-of-living index increases were high enough to trigger adjustments to nearly all retirement-related IRS contribution and income amounts for 2019 vs. 2018.
The only key amounts that remain the same from 2018 are catch-up contribution amounts for those over age 50.
401(k) max Contribution 2019
- Contribution limits for employee 401(k) plans will increase from $18,500 in 2018 to $19,000 in 2019.
- Catch-up contributions for 401(k) participants aged 50 and older stay at $6,000.
Traditional IRAs (individual retirement account)
- The annual contribution cap for individual retirement accounts (IRA) is up $500 from 2018 at $6,000 per eligible individual.
- Catch-up contributions for those 50 and over remain capped at an additional $1,000 ($7,000 total contribution).
2019 IRA Contribution
- The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $64,000 and $74,000 (up $1,000 from 2018).
- For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out increases by $2,000 vs. 2018, to a range of $103,000 to $123,000.
- 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.
2019 Roth IRAs Contribution
- For married couples filing jointly, the income phase-out range for taxpayers contributing to a Roth IRA is at an AGI of $193,000 to $203,000, up from $189,000 to $199,000 in 2018.
- For singles and heads of household, the Roth IRA income phase-out range is $122,000 to $137,000, up from $120,000 to $135,000.
- For a married individual filing a separate return, the Roth IRA phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000
Additionally, the annual compensation limit was increased, from $275,000, to $280,000 for 2019. The IRS has also increased the defined 415(c) contribution limit for 2019. The defined contribution limit was increased $1,000, to $56,000.
The full listing of contribution and compensation limits can be found at the IRS website here.
2019 401K Max Contribution Financial Planning in Florida
While companies review their payroll systems to program in the new limits, Mintco Financial Independent Advisors recommends that they also take the opportunity to review their plan document definition of compensation eligible for deferrals, and verify that it is consistent with how the payroll system is calculating the deferrals.
As new pay codes are utilized, payroll systems are changed, or the plan is restated, there are many opportunities for errors.
The most common errors that we see are related to bonuses, over-time and paid time off.
The incorrect application of plan compensation continues to be a common error identified by the regulators as well as in our audits.
These errors can result in significant corrections as the Company can be required to reimburse the plan for a portion of the missed deferrals and the associated employer matching contributions.
If you have questions about the increased contribution limits, reviewing your payroll system for potential common errors or anything else related to your plan, please call Mintco Financial at 813-964-7100 or email us info@mintcoFinancial.com
We hope to speak with you soon!