Life moves by quickly and saving for the “golden” years sometimes gets pushed aside. As summer approaches and you sit on that beach in Sonoma County or along the San Francisco Bay, perhaps a quick “to do” or call to your financial advisor is to figure out if you are contributing enough into your retirement plan. Below is our quick refresher on how much is allowed to be socked away into a tax-deferred vehicle. And always remember that investing in a sustainable and responsible way will help make sure that this planet doesn’t get destroyed by those evil companies out there.
For 2019, changes were introduced to IRA and 401(k) plan contribution limits and income thresholds.
- Contribution limits for employer sponsored plans, like 401(k)s and 403(b)s, are $19,000 in 2019.
- Contribution limits for IRA plans are $6,000 in 2019 for individuals under age 50.
- The income phase-out ranges for taxpayers making contributions to a Roth IRA have increased to $122,000 for individuals filing single, and $193,000 for married couples filing jointly.
There are two primary retirement plans: employer-sponsored retirement plans and individual retirement accounts. Generally, an IRA is a tax-advantaged retirement account that any individual can open up on their own, unrelated to their employment situation. Meanwhile,employer-sponsored plans, like 401(k), 403(b), and 457 plans are only available if an employer offers one. If eligible, you can use both an IRA and an employer sponsored plan.
401(k) or 403(b) now $19,000
IRA plans now $6,000
IRA plans now $7,000 for those 50 years and older
The limit on annual contributions to 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plans increased to $19,000, compared to $18,500 in 2018. The additional catch-up contribution limit will remain at $6,000 for a total contribution limit of $25,000 for employees 50 years old and older.
The limit on annual contributions to an IRA increased to $6,000, compared to $5,500 in 2018. The additional catch-up contribution limit for individuals 50 years old and over will remain at $1,000.
For those self-employed folk out there, a SEP IRA is a type of retirement plan available as well. The primary difference between a SEP IRA and a traditional or Roth IRA is the annual contribution limit. For 2018, the contribution limit to SEP IRAs for those who are self-employed is the lesser of 20% of net income from self-employment, OR $55,000 ($54,000 for 2017).
If you have any question or are interested in learning more about how to invest for future and do so in a sustainable way, don’t hesitate to reach out to us.