You may or may not have caught the news, but the IRS announced last October that it was increasing the 401K contribution limit from $18,000 to $18,500. This is the first jump in that ceiling since 2015. The new limits were announced last October, and they also apply to 403(b)s, the majority of 457 plans and the federal government Thrift Savings Plan for 2018.
Catch up contributions
The feds didn’t change the limit for catch-up contributions for employees ages 50 and over, however. That amount still is $6,000.
Contribution limits for traditional and Roth IRA plans also stayed flat at $5,500, with catch-up contributions of $1,000 for those 50 and over.
Those covered by a workplace retirement plan such as a 401K, the income ranges for IRA deduction phaseouts also changed for 2018.
- For single taxpayers with a workplace retirement plan, the deduction is phased out for those making $63,000 to $73,000, up from $62,000 to $72,000.
- For married couples filing jointly, where the IRA contributor is covered by a workplace plan, the income phase-out range rises to $101,000 to $121,000, from a range of $99,000 to $119,000.
- And for couples where the individual contributor is not covered by a plan, but their spouse is, the income phase-out range climbs to $189,000 to $199,000 from $186,000 to $196,000.
There were increases in the income phaseouts for Roth IRA contributions.
For single taxpayers, the phaseout range is now $120,000 to $135,000, up from $118,000 to $133,000. And for married couples filing jointly, the income phase-out range is $189,000 to $199,000, up from $186,000 to $196,000.
Each year, the IRS assesses contribution limits for pension plans and retirement saving accounts to accommodate for cost of living adjustments. Last year, the IRS made no significant adjustments to either 401K or IRA contribution limits.