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Tuesday May 21, 2019
IRA and 401(k) Contributions in 2019
On November 1, 2018, the IRS announced the 401(k) and IRA contribution limits for 2019. The IRA limit increases from $5,500 in 2018 to $6,000 in 2019. Individuals over age 50 may make a catch-up contribution of $1,000, for a total transfer of $7,000 in 2019.
Traditional IRA contributions from earned income are tax deductible. The traditional IRA has two main tax benefits - contributions are tax deductible and grow tax free. If you are covered by a qualified retirement plan at your work place, the IRA deduction may be reduced or phased out.
The Roth IRA phaseout limits also increase in 2019.
If your employer offers both a traditional 401(k) and a Roth 401(k) plan, you may allocate your employee contribution to one or both funds. The traditional 401(k) amounts are deductible, but the Roth 401(k) contributions are after-tax.
Many employers match their employees' 401(k) contributions. This is a good way to encourage employee participation in a 401(k) plan. The employer match is used to fund the employees' traditional 401(k) accounts. Employees may still make contributions to Roth 401(k) accounts up to the $19,000 or $25,000 limit.
Published November 2, 2018