Good news! Retirement plan contributions are going up. Here are retirement accounts that are increasing and how much they are increasing.
The annual contribution limit for 2019 is going up from $18,500 to $19,000. The catch-up contribution will stay the same at $6,000. The catch-up only affects people who are 50 years of age or older.
To be classified as a Highly-compensated employee (HCE), you have to earn at least $120,000 per year. That’s going up $5,000 to $125,000 per year. Employers can limit how much HCEs contribute based on 401k/ERISA plan requirements.
Simple IRA/Simple 401k
The contributions for these plans are going up also. Currently, the annual contribution limit is $12,500 with a catch-up contribution of $3,000. The contribution limit for 2019 will be $13,000 and the catch-up will stay the same.
Traditional IRA/Roth IRA
The current contribution limit for these IRAs is $5,500 per year with a catch-up of $1,000. The limit for 2019 will be $6,000 with catch-up staying the same.
If you have an employer-sponsored plan (i.e. 401k, 403b, 457, or one of the Simples) and an IRA (Traditional or Roth) you can contribute to both if you would like to. If you have the means and the drive, you can even max out both plans.
Saving for retirement, at times, can be challenging, but these plans help a lot!
If you want to learn more about these plans and/or start your retirement plan process, shoot me an email. At the very least, use the sign-up form to subscribe to our FREE monthly newsletter to increase your financial know-how.