If you imagine your retirement nest egg as a house, then your 401(k) and IRAs are the tools you use to design, build, and remodel it. You want your house to last for years to come and to support your future. So, it’s important to get the most out of your 401(k) and IRA tools today. Because, let’s face it, when retirement comes around someday, you don’t want to be leaving your retirement party realizing that you were the person who whacked his or her thumb with a hammer.

So, as we move into 2019, here’s what you need to know:

401(k) Contribution Limits

In 2019, you can contribute $500 more into your 401(k) than last year, meaning you can save as much as $19,000. For employees age 50 and older, the catch-up contribution limit remains the same, allowing them to save up to an additional $6,000 in their accounts.

Plan ahead so you will get the most from these higher contribution limits. You can work with your plan provider at the start of the year and increase your savings rate.

Traditional and Roth IRA Contribution Limits

For IRA accounts, you will be able to save up to $6,000, up from $5,500 in 2018. Investors who are 50 and older may save an additional catch-up contribution of $1,000.

Tax-Deductible Phase-Outs

Depending on your income level, the tax deduction of your Traditional IRA contribution may be partially or completely phased out. But don’t forget: even if your income is too high to qualify for a deduction, you can still contribute into your IRA. It just won’t be deductible.

For single investors who are covered by an employer-sponsored retirement plan, the deduction is phased out for adjusted gross income (AGI) levels between $61,000-$71,000.

It gets a bit more complicated if you are married and filing jointly. Where a spouse making the IRA contribution is covered by an employer-sponsored retirement plan, the deduction is phased out if your AGI is between $98,000-$118,000. For an investor who’s not covered by a company plan, but whose spouse is covered, the deduction is phased out if your AGI is $183,000-$193,000.

A Rule About IRA Rollovers

Since January 1, 2015, investors have been able to do just one IRA-to-IRA rollover in a one-year period (365 days, not a calendar year). The IRS considers a rollover to be “a distribution from an IRA that is payable to the IRA owner who can then roll those funds over to the same or another IRA within 60 days.” In the investment world, this is often referred to as an “indirect rollover” because the IRA assets are first paid out to the investor who later gives the money to the alternate custodian.

This new rule may make things sticky if you plan on doing multiple rollovers within one calendar year. To keep things simple and avoid any unintended consequences, just stick with custodian-to-custodian transfers. This is when you have IRA Company A send your retirement assets directly to IRA Company B.

Is it Time to Review Your Retirement Strategy?

Are you leveraging your retirement tools to the best of your ability? Make sure you are meeting with us at least once a year to make sure your retirement strategy is still on course to meet your goals.


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