Retirement contribution limits will rise in 2019

Modern Life Navigator

2 weeks ago

Retirement Contribution Limits Set to Increase in 2019

As we usher in 2019, there is good news for those who are focused on their future retirement savings. According to the Internal Revenue Service (IRS), the retirement contribution limits will see a rise in 2019, allowing individuals to save more in tax-advantaged retirement accounts. This comes as a welcome announcement for those who are seeking to maximize their retirement savings.

Understanding The 2019 Retirement Contribution Limits

The IRS has announced new contribution limits for employees who participate in 401(k), 403(b), most 457 plans, and the government's Thrift Savings Plan. The limit has been increased from $18,500 in 2018 to $19,000 in 2019. This marks a $500 increase and the first rise of this limit since 2015.

Impact on Individual Retirement Accounts (IRAs)

Furthermore, the limit for contributions to an Individual Retirement Account (IRA), which hadn't seen an increase since 2013, has also been raised. The annual contribution limit for IRAs will be $6,000 in 2019, up from $5,500 in the previous years.

Understanding the ‘Catch-Up’ Contributions

For those who are aged 50 or older by the end of the year, there is an additional provision known as 'catch-up' contributions. These individuals can contribute an extra $1,000 to their IRA and an additional $6,000 to their 401(k) and other similar plans. However, it's important to note that the catch-up contribution limits for 2019 have remained unchanged from 2018.

Maximizing Your Retirement Savings

With the increased contribution limits, here are a few strategies to consider to make the most of your retirement savings:

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<li>Start early: The earlier you start contributing to your retirement savings, the more time your money has to grow.</li>

<li>Maximize contributions: If possible, try to contribute the maximum amount to your retirement accounts. This not only allows you to save more but also reduces your taxable income.</li>

<li>Consider catch-up contributions: If you're aged 50 or older, don't forget the catch-up contributions. This can significantly boost your retirement savings.</li>

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Conclusion

The increase in retirement contribution limits is a positive move for those looking to bolster their retirement savings. It's a golden opportunity to prepare for a secure and comfortable retirement. However, it's essential to remember that every person's circumstances and retirement needs are different. Therefore, it's always a wise decision to seek advice from a financial advisor to create a retirement savings strategy that's tailored to your specific needs.

Remember, planning for retirement is not a one-time activity—it's a continuous process. With the right approach and strategies, you can make the most of these increased contribution limits and set yourself up for a stable and secure financial future.