Saving for retirement is essential, and with a little planning and preparation, enjoying your retired years with the peace of mind of financial stability is completely attainable. For those who contribute to a 401(k) or IRA accounts, there’s good news for 2019. The limits for these types of retirement accounts are seeing an increase. Changes are coming in the world of retirement savings. When it comes to new 401(k) and IRA limits, here’s what to expect in the New Year.
401(k) Contribution Limits for 2019
Expect to be able to contribute more to your retirement plan in 2019 if you contribute to one of the following:
Most 457 plans
Contributions will increase from $18,500 to $19,000, meaning that this higher maximum allows you to increase your tax benefit on your retirement savings. Financial experts suggest that if your retirement plan is already maxed, increase the deferrals from your paycheck, so that you can continue to automatically max out your retirement plan to account for the higher limits.
IRA Contribution Limits for 2019
IRA contributions will see the first increase since 2013, increasing $500 to make the limit $6000 in 2019. This will be extremely valuable to young savers as this extra $500 will compound over time. For example, financial experts calculate that this extra $500 that is invested yearly can equate to $100,000 extra in retirement savings over a period of 35 years, provided that a small percentage (about 8%) returns in the retirement plan. This is a more efficient way to work toward a comfortable retirement.
Those who don’t have access to a 401(k) or an IRA through their work can also contribute to a tax-deductible IRA; however, those who are eligible for these plans may be prohibited from claiming an extra tax deduction on their IRA contribution if they earn too much.
Roth IRA Contribution Limits for 2019
Those who contribute to a Roth IRA can earn $2000 more in the New Year and still remain eligible to contribute in a Roth IRA. However, those who make more than $122,000 are not eligible to contribute to this type of IRA, being that many contributions to Roth IRAs remain untaxed. Those who are in lower tax brackets tend to gravitate toward Roth IRAs since the after tax contributions allow for the qualification of tax-free investment growth in retirement.
New Year. New Changes
These changes in contribution limits can greatly affect how you save for your retired years. You’ve worked hard all your life and want to be able to enjoy your hard work comfortably once you retire. We will see changes in 2019 that will help those who are saving for their future, and we expect to see more changes as the years go on. Keeping current with these changes can help you save smarter, which will have a big impact on your financial stability in the future.
At Bodine Perry, we can help design the right retirement plan for you. Contact our office at (855) 851-8318 or visit www.bodineperry.com to learn more about how our professionals can help.