2019 has many changes in store for 401ks and IRA’s. A few of those key changes are:
Employees who contribute to a 401k are now limited to $19,000.00 a year from $18,500.00.
IRA annual contribution limits are increased to $6,000.00 from $5,500.00. The catch up contribution limit for taxpayers over fifty years old is still $1,000.00.
Taxpayers may be able to deduct contributions to a traditional IRA, but if the taxpayer or their spouse already had a retirement plan at work, there will be some limits.
For single taxpayers, the AGI phase out is $64,000 to $74,000. This means that if your AGI is $64,000-$74,000, your deduction will be limited. AGI over $74,000 means that you can’t take the deduction at all.
For married filing joint taxpayers, the AGI phase-out range is $103,000 to $123,000. The same concept applies as the single taxpayer. So, any income over $103,000, you cannot take the deduction at all.
If a spouse contributes to an IRA and they do not have a workplace retirement plan, but their spouse does, the AGI phase out range is between $193,000 and $203,000. Again, anything over $203,000 the taxpayer cannot take the deduction at all.
If we are talking about a married filing separate return and the taxpayer is covered by a workplace retirement plan, then the AGI phase-out range remains $0 to $10,000.
The AGI income phase-out range for taxpayers making contributions to a Roth IRA is $122,000 to $137,000 for singles and heads of household. For married couples filing jointly, the AGI income phase-out range is $193,000 to $203,000. The AGI phase-out range for a married individual filing a separate return remains $0 to $10,000.