IRA and 401K limits increase for 2019

[Zeno]

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,500 to $19,000.

The limit on annual contributions to an IRA, which last increased in 2013, is increased from $5,500 to $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

https://www.irs.gov/newsroom/401k-c...to-19000-for-2019-ira-limit-increases-to-6000

This is good news for me. My last 10 year push is on and every extra dollar I can sock away counts.

Another 4 years and I can do the catch up contributions too.

 

[Bada0Bing]

Yeah this is good news. Should be even higher IMO. Retirement is going to be expensive for me. I plan to do some serious traveling.

 

[Zeno]

Yeah this is good news. Should be even higher IMO. Retirement is going to be expensive for me. I plan to do some serious traveling.

Yeah, I have my $$ goals for retirement and the increase helps me get closer to that. The market has taken a dive this quarter but overall I am way up since 2016...with conservative market estimates over the next 10 years (around 5-6%) I will easily surpass my IRA & 401K goals at retirement...if the market tanks however...ugh, don't even want to think about it.

Traveling is on my retirement list too, so many National Parks to visit and bucket list items to check off.

 

[82CardsGrad]

Virtually meaningless... It's laughable that anyone in Washington would prop up the value and importance of "saving," and then put such ridiculous limitations on what we can save...

 

[AZCB34]

Virtually meaningless... It's laughable that anyone in Washington would prop up the value and importance of "saving," and then put such ridiculous limitations on what we can save...

They have no choice but to put limitations on it.

 

[Zeno]

Virtually meaningless... It's laughable that anyone in Washington would prop up the value and importance of "saving," and then put such ridiculous limitations on what we can save...

I certainly don't consider it meaningless. Everything is regulated so being able to save more sure helps in the long run. Being able to save more now also helps in current taxes when it comes to the 401K by lowering my AGI and being able to put more in my Roth IRA allows me to save taxes when I withdraw it in retirement.

 

[82CardsGrad]

I certainly don't consider it meaningless. Everything is regulated so being able to save more sure helps in the long run. Being able to save more now also helps in current taxes when it comes to the 401K by lowering my AGI and being able to put more in my Roth IRA allows me to save taxes when I withdraw it in retirement.

$500 over a year?? C'mon man... how much does $500 a year impact your tax situation? And isn't that the chief reason why Washington doesn't increase the limit beyond a measly $500??

 

[82CardsGrad]

They have no choice but to put limitations on it.

You're probably right... and, I'm ok with the idea of limitations... but, let's all call it what it really is. As Trump and his gang scream about tax cuts and more tax cuts, easing these limitations would further erode Fed tax revenues...

 

[Zeno]

$500 over a year?? C'mon man... how much does $500 a year impact your tax situation? And isn't that the chief reason why Washington doesn't increase the limit beyond a measly $500??

Every little bit helps. $500 X 10 years = $5000 and 2 different accounts = $10K, all of which will be compounding interest over time. No it isn't going to make me rich but it is hardly meaningless, I could always use an extra $10K for one thing or another.

 

[82CardsGrad]

Every little bit helps. $500 X 10 years = $5000 and 2 different accounts = $10K, all of which will be compounding interest over time. No it isn't going to make me rich but it is hardly meaningless, I could always use an extra $10K for one thing or another.

Well, it's not really $10k...as, the second you access the $10k, you will be taxed...

 

[Zeno]

You're probably right... and, I'm ok with the idea of limitations... but, let's all call it what it really is. As Trump and his gang scream about tax cuts and more tax cuts, easing these limitations would further erode Fed tax revenues...

401K's went up $2500 in Obama's 8 years in office, there were 3 straight years his administration didn't raise it at all. Let's not act like Trump is doing anything more or less than any previous president, his administration has raised it twice for $1000 total.

 

[Zeno]

Well, it's not really $10k...as, the second you access the $10k, you will be taxed...

Only half of it, a Roth is post tax and anything I make on it and withdraw after 59.5 is all mine.

 

[82CardsGrad]

401K's went up $2500 in Obama's 8 years in office, there were 3 straight years his administration didn't raise it at all. Let's not act like Trump is doing anything more or less than any previous president, his administration has raised it twice for $1000 total.

Oh yea. It doesn't matter what President is in office... They are all loathe to meaningfully ease this limitation. And we know why... $$$$

 

[82CardsGrad]

Only half of it, a Roth is post tax and anything I make on it and withdraw after 59.5 is all mine.

True. I missed where you said half of your 401k is in a Roth... I have a portion of mine in a Roth as well.

 

[Zeno]

I max out both already, Roth & 401K(in my case TSP) that is why every bit extra matters. So now I will be able to contribute $25K to retirement a year instead of $24K, doesn't seem like a lot but that extra $$ is compounding interest as well. Like I said every bit counts, the immediate tax benefits may not be significant but in the long run it can be a decent chunk of change...maybe it will allow me to buy that Polaris Ranger I want to roam my property in retirement

 

[82CardsGrad]

I max out both already, Roth & 401K(in my case TSP) that is why every bit extra matters. So now I will be able to contribute $25K to retirement a year instead of $24K, doesn't seem like a lot but that extra $$ is compounding interest as well. Like I said every bit counts, the immediate tax benefits may not be significant but in the long run it can be a decent chunk of change...maybe it will allow me to buy that Polaris Ranger I want to roam my property in retirement

Cool! Not to get too in-depth, but, just curious... How have your plans held up with the recent market ups & downs... mainly downs...?

 

[Zeno]

Cool! Not to get too in-depth, but, just curious... How have your plans held up with the recent market ups & downs... mainly downs...?

Since 2017 I have had a rate of return of 12%, even considering I have only made 2.6% this year (with most of the drop this quarter)--I was at about 17% in 2016. I generally use 5-6% as the average rate of return when looking at my projected retirement balance to try to stay conservative and at that rate I should make my retirement $$ goal 2 years prior to retirement (I plan to retire at 56 & 1 month) that is without the expected limit increases in the next 10 years.

 

[82CardsGrad]

Since 2017 I have had a rate of return of 12%, even considering I have only made 2.6% this year (with most of the drop this quarter)--I was at about 17% in 2016. I generally use 5-6% as the average rate of return when looking at my projected retirement balance to try to stay conservative and at that rate I should make my retirement $$ goal 2 years prior to retirement (I plan to retire at 56 & 1 month) that is without the expected limit increases in the next 10 years.

Good for you! Sounds like you have your funds in some relatively conservative holdings?

 

[Zeno]

Good for you! Sounds like you have your funds in some relatively conservative holdings?

Yeah fairly conservative, nothing really high risk and it is pretty diverse, mostly stocks but mutual funds as well. They say the average annual return in the stock market is around 9.5% the past 80 years or so, if my plans keep up with that average I will be thrilled and shatter my goals. I tend to estimate on the low side so I don't set myself up for disappointment.

My wife was at 21+% in her investment returns last year but she is now -2% this year. She retires before I do (7 more years for her, 10 for me) and she is planning to go more conservative from here on out.

 

[AZCB34]

You didn't ask me but as I am (hopefully) close to retirement, the recent volatility has been a little unnerving since my wife and I are still very aggressive. Being in the investment industry as long as I have been, this volatility wasn't unexpected and I suspect tomorrow (literally Wednesday) done of the uncertainty the markets have been reacting to will settle.

We are still trending towards a comfortable retirement and the additional money we can sock away is appreciated. Every little bit helps.

 

[Zeno]

Here is a positive article....

Since 1946, there have been 18 midterm elections. Stocks were higher 12 months after every single one. Every single one. That’s 18 for 18. Even though we’ve had every possible political combination in the past 72 years. Republican president with Democratic Congress. Democratic president with Republican Congress. Republican president and Congress. Democratic president and Congress.

Since 1946, stocks have risen an average of 17% in the year after a midterm. And if you measure from the yearly midterm lows, the results are even better. From their lows, stocks jumped an average of 32% over the next 12 months.

https://www.marketwatch.com/story/t...idterm-election-since-world-war-ii-2018-11-05

So if history holds true we should be in for a good year coming up.

 

[AZCB34]

Here is a positive article....

Since 1946, there have been 18 midterm elections. Stocks were higher 12 months after every single one. Every single one. That’s 18 for 18. Even though we’ve had every possible political combination in the past 72 years. Republican president with Democratic Congress. Democratic president with Republican Congress. Republican president and Congress. Democratic president and Congress.

Since 1946, stocks have risen an average of 17% in the year after a midterm. And if you measure from the yearly midterm lows, the results are even better. From their lows, stocks jumped an average of 32% over the next 12 months.

https://www.marketwatch.com/story/t...idterm-election-since-world-war-ii-2018-11-05

So if history holds true we should be in for a good year coming up.

Very interesting statistic. Not surprising though since over the results are in, the uncertainty had been removed. The most interesting party is, historically, we are heading into a robust up year. Let's hope history holds true.

 

[Shane]

What is th epos too limits on what you can save? Can someone explain this to me? People should be allowed to save as much as they possibly can.

 

[Zeno]

What is th epos too limits on what you can save? Can someone explain this to me? People should be allowed to save as much as they possibly can.

They are tax breaks (now for 401K or later for Roth) it is my understanding the Government does that so people can't use a loophole to get out of taxes. If you use a regular type of investment you are paying on any interest earned on your annual return (in most cases) as these are retirement benefit accounts they don't have to do that.

The one change I'd really like to see is getting rid of that modified adjusted gross income limit for contributions to a Roth.

 

[82CardsGrad]

They are tax breaks (now for 401K or later for Roth) it is my understanding the Government does that so people can't use a loophole to get out of taxes. If you use a regular type of investment you are paying on any interest earned on your annual return (in most cases) as these are retirement benefit accounts they don't have to do that.

The one change I'd really like to see is getting rid of that modified adjusted gross income limit for contributions to a Roth.

Isn't it true that, even if you wanted to contribute "after-tax" money to a 401k, you would still bump up against the limits?