Update: This is an old post featuring the 2018 limits. Need to know the 2019 limits for IRA, Roth IRA, and 401k contributions? See the 2019 post, here.
Good news on the retirement front this year! For the first time in 6 years contribution limits for some retirement accounts are going up! What has changed for 2018 when it comes to your 401(k), IRA, ROTH IRA, and more? Here’s the quick rundown for most savers:
For more details:
IRA and ROTH IRA contribution limits stayed the same, along with the catch-up contribution amount of $1,000 for those age 50 or older. But 401K contribution limits got bumped up $500, and the income limit to be eligible for a ROTH IRA went up slightly.
Here’s the details for the changes to retirement accounts in 2018:
401(k)s in 2018 -Limits, Contributions, Etc.
Your annual contribution limit for 401(k), 403(b), most 457 plans, and the federal government’s TSP (Thrift Savings Plan), is $18,500 for 2018. For those that budget or want to set contributions on autopilot, that means starting in January you want to set up monthly contributions of $1,541.66, or if you are paid bi-weekly you want to contribute $711.53 per paycheck (assuming 26 paychecks throughout the year).
If you are age 50 or older, you have an extra $6,000 per year you can contribute to your 401(k), TSP, 403(b) or 457 plan. That equates to $2041.66 per month, or $942.30 per bi-weekly paycheck.
Total annual contribution limits for these accounts, including employer contributions is raised to $55,000 for 2018.
SEP IRAs and Solo 401(k)s – 2018 Contribution Limits for the Self Employed
Self-employed and small business owners have similar limits, just worded a little differently. The amount you can contribute to a SEP IRA or a solo 401(k) goes up to $55,000 in 2018.That’s $4583.33 per month, or $2115.38 per bi-weekly paycheck. Contributions are also limited based on salary. Remember, contributions an employer can make to an employee’s SEP-IRA cannot exceed the lesser of:
- 25% of the employee’s compensation, or
- $55,000 for 2018
SIMPLE 401k Limits, Catch-Up Contributions for 2018
The limit for SIMPLE 401k retirement accounts for 2018 is $12,500. Catch-up contribution limit for those over age 50 is $3,000 for a total of $15,500.
IRA Deduction Income Limits and Phase-Outs for 2018
The income limits for being able to deduct your traditional IRA contributions have changed slightly.
If you are covered by a workplace retirement plan (such as a 401k):
You are able to deduct 100% of your traditional IRA contributions if your income is below $63,000 if single, or below $101,000 if married.
You are able to deduct a portion of your traditional IRA contributions if your income is between $63,000 and $73,000 if single, or between $101,000 and $121,000 if married.
If you are not covered by a workplace retirement plan:
Your IRA contributions are deductible regardless of your income if you are single or married to someone who is also not covered by a workplace retirement plan.
IRA contributions for those not covered by a workplace retirement plan but married to someone who is covered, are 100% deductible if the couple’s household income is less than $189,000 in 2018.
You are able to deduct a portion of your contribution if you are not covered by a workplace retirement plan but married to someone who is covered, if your income is between $189,000 and $199,000.
Roth IRA Phase-Outs, Income Limits, Etc. for 2018
You are eligible to make the maximum contribution to a ROTH IRA in 2018 if your income is less than $120,000 if single, or $189,000 if married.
You are eligible to make a reduced contribution to a ROTH IRA in 2018 if your income is between $120,000 and $135,000 if single, or between $189,000 and $199,000 if married.
Where can you lean more? The IRS put out Notice 2017-64 that details most of the changes.