The IRS recently announced an increase in retirement plan contribution limits for 2019. These limits are tied to the rate of inflation and typically have a minimum adjustment amount of $500.
The contribution limits for 401k type plans have increased from $18,500 per year in 2018 to $19,000 for tax year 2019.
For the first time since 2013, the contribution limits for IRA and ROTH IRA contributions have increased from $5,500 per year to $6,000 per year.
While both deferral limits have increased for tax year 2019, the catch-up contributions for participants age 50 and older remain the same at $6,000 for 401k type plans and $1,000 for IRA and ROTH IRAs.
Salary deferrals through your employer may automatically adjust to the new limits if you’ve elected to defer the maximum amount allowed each year. However, non-employer plans such as Traditional IRAs and ROTH IRAs may not automatically adjust. If you have established a monthly contribution to your Traditional IRA or ROTH IRA, be sure to increase the contributions if your goal is to contribute the maximum amount for the 2019 tax year.