Dina Ouellette | January 10, 2019
The IRS has released the 2019 cost-of-living adjustments (COLAs) for two significant areas–pension plan dollar limitations and other retirement-related provisions. Here is a look at the areas that are being impacted.
Inflation Adjustments
The contribution limit has increased from $18,500 for 2018 to $19,000 for 2019, and applies to employees who take part in any of the following types of retirement plans:
- 401(k) plans;
- 403(b) plans;
- most 457 plans; and
- the federal government’s Thrift Savings Plan.
Additionally, the annual limit on contributions to an IRA has increased from $5,500 for 2018 to $6,000 for 2019. The catch-up contribution limit for individuals over the age of 50 remains at $1,000.
Phase-Out Ranges
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. The deduction phases out if the taxpayer or spouse takes part in a retirement plan at work; the phase-outs do not apply if neither the taxpayer nor the spouse is covered by a retirement plan at work.
The phase-out depends on the taxpayer’s filing status and income:
- For single taxpayers covered by a workplace retirement plan, the 2019 phase-out range is $64,000 to $74,000.
- For joint filers, when the spouse making the contribution takes part in a workplace retirement plan, the 2019 phase-out range is $103,000 to $123,000.
- For an IRA contributor who is not covered by a workplace retirement plan but whose spouse is covered, the 2019 phase-out range is $193,000 to $203,000.
- For a married individual covered by a workplace plan and filing a separate return, the 2019 phase-out range remains $0 to $10,000.
For Roth IRA contributions, the 2019 income phase-outs are:
- $122,000 to $137,000 for singles and heads of household;
- $193,000 to $203,000 for joint filers; and
- $0 to $10,000 for married separate filers.
Finally, the income limits for the Saver’s Credit—also known as the Retirement Savings Contributions Credit—for low- and moderate-income workers are:
- $64,000 for joint filers;
- $48,000 for heads of household; and
- $32,000 for singles and married separate filers.
As we now enter into 2019, people should be mindful of each of these adjustments as they plan for the coming year.
Dina Ouellette, CPA, is a Director with blumshapiro, the largest regional business advisory firm based in New England, with offices in Connecticut, Massachusetts and Rhode Island. The firm, with a team of over 500, offers a diversity of services, which include auditing, accounting, tax and business advisory services. blum serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies. To learn more visit us at blumshapiro.com.
