The 2019 retirement plan limits have recently been announced by the IRS.
These new limits are effective January 1, 2019.
If you are an employee and a retirement plan participant, be sure to contact your employer as soon as possible if you wish to change your retirement plan salary deferrals for 2019. Of course, if you’re a Springwater client, we’re happy to assist!
If you are an employer and either don’t have a retirement plan in place or have questions about your existing one, please contact us for a complimentary tailor-made proposal and comparison with your current plan. You’ll have happier, more satisfied employees while also saving money.
401(k)s, 403(b)s, etc. The standard contribution limit for employee salary deferrals to a qualified retirement plan – 401(k), 403(b), most 457 plans, and the government’s Thrift Savings Plan – increases to $19,000 for 2019 (was $18,500 for 2018).
The “Catch-up”. The “catch-up” deferral limit for these plans remains at $6,000, so a person who is age 50 or older can defer a maximum of $25,000 in 2019 ($19,000 deferral plus $6,000 catch-up).
Annual Defined Contribution Limit. The maximum “annual additions” limit (salary deferrals, plus profit sharing, plus forfeiture allocations, etc) to a defined contribution plan is increased to $56,000 for 2019 (from $55,000 for 2018). Note that the catch-up deferral is in addition to this, so the annual contribution limit for a person age 50 or older is $62,000.
SEP IRAs. The contribution limit for a SEP IRA in 2019 is increased to the lesser of (a) $56,000, or (b) 25% of the employee’s salary. [Note that a special computation is required to determine the contribution amount for self-employed individuals contributing for themselves]. The compensation limit used in the savings calculation is increased to $280,000 for 2019 (was $275,000 for 2018).
Solo 401(k)s. The contribution limit for a Solo 401(k) in 2019 is increased to the lesser of (a) $56,000, or (b) 100% of the employee’s salary. Note that the catch-up deferral is in addition to this, so the annual contribution limit for a person age 50 or older is $62,000.
IRAs. The contribution limits for Traditional and Roth IRAs is increased to $6,000 (was $5,500 for 2018). This is the first increase in the IRA contribution limit since 2013. The catch-up contribution for a person age 50 or older remains at $1,000 in 2019, for a total of $7,000.
Simple IRAs. The contribution limit for a Simple IRA is increased to $13,000 for 2019 (was $12,500 in 2018). The catch-up contribution for a person age 50 remains at $3,000, for a total of $16,000.
Defined Benefit Plans. Finally, the limitation on the annual benefit of a “defined benefit” plan in 2019 is $225,000, up from $220,000 for 2018.
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