Great news! The IRS announced earlier today that they are raising the contribution limits for various retirement accounts in 2019. You will now be able to save just a little bit more in a tax-friendly way for retirement.
Most notably, the annual limit for IRA contributions is increasing from $5,500 to $6,000 per year. The limit has not been increased since 2013. The “catch-up” contribution of an additional $1,000 for those over age 50 remains unchanged.
The annual employee contribution limit to 401k, 403b, and TSP accounts will be increased by $500 to $19,000 per year. This limit has been raised more regularly by the IRS over recent years so this adjustment is more expected and less newsworthy. The additional catch-up amount remains unchanged at $6,000.
Income limits for being eligible for various types of retirement accounts will also be raised slightly. For example, the income phase-out for single individuals contributing to a Roth IRA will now begin at $122,000 per year of modified adjusted gross income (up from $120,000). For married individuals filing jointly the eligibility phase-out will begin at $193,000 (up from $189,000).
These changes are important to you if you are seeking to max out your contributions to your retirement plan. Also, if your income is near the limit of being eligible for a Roth IRA or not, the increase limit could be particularly meaningful.