There’s good news for anyone looking to save more for their retirement:
Participants in 401(k) and other defined contribution retirement accounts will see their annual contribution cap raised from $18,500 to $19,000 in 2019, according to just-announced Internal Revenue Service limits.
The new limit will also apply to 403(b), Thrift Savings and most 457 retirement accounts plans.
Also, the limits for individual retirement accounts have been bumped up for the first time since 2013. In 2019, you will be able to save up to $6,000 in your IRA, up from $5,500 in 2018. The annual “catch-up” IRA contribution for savers age 50 and over will remain at $1,000, meaning they can stash away a total of $7,000 annually.
The option to put an extra $500 each into an IRA and a 401(k) might not seem like all that much. But it could save people big-time in the long run. For someone who starts contributing at age 30 and retires at age 67, the extra $1,000 a year adds up to an additional $134,000 in retirement savings at a 6% return, according to NerdWallet.
For people who can’t come up with the extra $1,000 to max out both accounts, it’s important to compare options when deciding between contributing to a 401(k) or an IRA. If your employer offers a 401(k) with a company match, try to contribute at least enough to get the maximum matching dollars possible.
Under another change announced by the IRS, more low and moderate-income families in 2019 may be able to claim the Saver’s Credit on their tax returns for contributions to retirement savings plans.
The threshold next year will increase by $1,000 for married couples, to $64,000; $48,000 for head of households, up $750; and $32,000 for singles and single filers, up $500 from last year.
Also, the 2019 annual HSA contribution limit for individuals with single medical coverage is $3,500, an increase of $50 from 2018. The limit is $7,000 for those covered under qualifying family plans (up from $6,900 in 2018). But if you’re 55 or older in 2019, you can contribute an additional $1,000 annually, or $4,500 total to an HSA for singles and $8,000 for families.
Scott McGraw is Vice President of CCIG’s Employee Benefits division. He can be reached at 720-330-7924 or ScottM@thinkccig.com.
CCIG is a Denver-area insurance brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We also help you manage your long-term cost of risk with our risk and claims management expertise and a commitment to service excellence.
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