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Max Out Your Retirement Plan Contributions


The IRS typically adjusts maximum amounts for retirement plans each year, although the changes are usually small. For 2019, you can squirrel $19,000 away in your 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan. The annual limit for IRAs is $6,000. The catch-up contribution limit for individuals aged 50 and over is $1,000 for IRAs and $6,000 for most employer plans.

Catch-up contributions help you increase your retirement savings; when you're young, you aren't thinking about retirement. Also, you probably have less income and more expenses—such as those that come with having children. As you get older, you may wish you were able to contribute more to make up for limited contributions in the past.

You can deduct contributions to a traditional IRA if you meet certain conditions: If during the year, either you or your spouse was covered by a retirement plan at work, the deduction may be reduced or phased out until it is eliminated, depending on filing status and income and if you weren't covered by a pension plan at work. Here are the phaseout ranges for 2019:

  • If you're single and covered by a workplace retirement plan, the phaseout range is $64,000 to $74,000.
  • If you're married and filing jointly, and your spouse is making the IRA contribution and is covered by a workplace retirement plan, the phaseout range is $103,000 to $123,000.
  • If you're not covered by a workplace retirement plan and you're married to someone who is covered, the deduction is phased out if as a couple your income is between $193,000 and $203,000.
  • If you're married and filing a separate return and are covered by a workplace retirement plan, the phaseout range is $0 to $10,000.
  • The income phaseout range for taxpayers making contributions to a Roth IRA is $122,000 to $137,000 for both singles and heads of household. For married couples filing jointly, the income phaseout range is $193,000 to $203,000. The phaseout range for a married individual filing a separate return and making contributions to a Roth IRA is $0 to $10,000.
  • The income limit for the Saver's Credit or the Retirement Savings Contributions Credit for low- and moderate-income workers is $64,000 for married couples filing jointly, $48,000 for heads of household, and $32,000 for singles and married individuals filing separately.

Finally, savers should be aware of Section 415 limits:

  • The limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is $225,000. 
  • The limitation for defined contribution plans under Section 415(c)(1)(A) is $56,000.

If saving more remains a resolution you make to yourself every year, this is good news for you. You can now put away more money toward your retirement accounts, including individual retirement accounts that have been bumped up for the first time since 2013.

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Seidel Schroeder & Co
Seidel Schroeder CPA
Office: (979) 836-6131
2707 South Market Street
Brenham, TX 77833
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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