Inflation of Adjustments for Qualified Retirement Plans Have Been Issued

The IRS has recently announced a limit increase on elective deferral contributions to the following:

l  401(k) Plans

l  Thrift Savings Plan

l  403(b) Plans

l  Most 457 Plans

The limit increase is a change from 2018’s $18,500 to $19,000 as of 2019. However, the catch-up contribution limit for those 50 or older has not changed and is still $6,000.

As is often the case with the IRS, however, these are not the only changes to take note of.

IRA Changes

Changes have also been made to individual retirement arrangement or IRA contributions for the 2019 tax year. The maximum deductible contribution to these accounts will increase from $500 to $6,000.

Also, taxpayers who are covered by workplace retirement plans will no longer be able to make a deductible IRA contribution if they are single or head of household with an adjusted gross income between $64,000 and $74,000.

For married couples filing jointly, the phaseout range is now $103,000 to $123,000 in cases where the spouse who makes the contribution is covered by a workplace retirement plan. If the IRA contributor is not covered by a plan but his or her spouse is, the deduction is no longer available for income ranges between $193,000 and $203,000.

In terms of Roth IRAs, phaseout for determining the maximum contribution is this same range for married couples filing jointly and $122,000 to $137,000 for singles or heads of household.

The Saver’s Credit

Finally, an adjusted gross income limit has been put in place for the saver’s credit. For married couples filing jointly, the limit is $64,000. For heads of household, it is $48,000, and for single taxpayers or married taxpayers filing separately, it is $32,000.

While these changes are a lot to keep in mind, remember that you can always determine how they affect you by speaking with a qualified tax professional.