Oliver S. Berryhill Blogs: 401k and IRA Contribution and Deduction Limits for 2018

In 2018, 401k contribution limits have gone up, while IRA contribution limits remained the same. Here are all the details, including IRA deduction limits.

401k contribution limits and IRA contribution limits

The IRS recently released the new 2018 401k and IRA contribution and deduction limits. The limits for 401ks jumped by $500 to $18,500, the first increase since 2015. Contribution limits for IRAs and remain the same in 2018. And that’s true for both contributions and catch-up contributions for those 50 or older. Here are the details.

401(k) Contribution Limits

As announced by the IRS, the contribution limit for 401(k) accounts increased from $18,000 in 2017 to $18,500 for 2018. Those 50 or older also get the catch-up contribution of $6,000. That brings the total contribution limit to $24,500 for those who qualify. These new contribution limits also apply to 403(b), most 457 plans, and the federal government’s Thrift Savings Plan.

Tax Year	Regular Contribution Limit	Catch-up Contribution Limit for those 50 & older
2018	$18,500	$6,000
2017	$18,000	$6,000
2016	$18,000	$6,000
2015	$18,000	$6,000
2014	$17,500	$5,500
2013	$17,500	$5,500
2012	$17,000	$5,500
2011	$16,500	$5,500
2010	$16,500	$5,500
2009	$16,500	$5,500
2008	$15,500	$5,000
2007	$15,500	$5,000
2006	$15,000	$5,000

IRA Contribution and Deduction Limits

With a deductible IRA, it’s important to understand both the contribution limits and the income limits to qualify for the deduction. While you can always contribute up to the $5,500 contribution limit assuming you have sufficient earned income, you’ll only be able to deduct your contribution on your federal taxes if you meet certain income limits.

IRA Contribution Limits

The maximum contribution in 2018 is still $5,500. The catch-up contribution for those 50 and older remains $1,000 (the catch-up contribution for an IRA is not indexed for inflation, so it always remains at $1,000). Here are the IRA contribution limits over the last several years:

Tax Year	Regular Contribution Limit	Catch-up Contribution Limit for those 50 & older
2018	$5,500	$1,000
2017	$5,500	$1,000
2016	$5,500	$1,000
2015	$5,500	$1,000
2014	$5,500	$1,000
2013	$5,500	$1,000
2012	$5,000	$1,000
2011	$5,000	$1,000
2010	$5,000	$1,000
2009	$5,000	$1,000
2008	$5,000	$1,000
2007	$4,000	$1,000
2006	$4,000	$1,000

Deductible IRA Income Limits

Now on to the question of whether your IRA contribution is deductible. Whether your IRA contribution is deductible depends on three factors: (1) your filing status, (2) your adjusted gross income, and (3) whether you are covered by a retirement plan at work.

Below are listed the phase out ranges based on the above factors for both 2016 and 2017. If your AGI is less than the bottom of the applicable range, your IRA contribution is fully deductible. If your AGI falls within the range, your contribution is partially deductible. And if your AGI is above the range, then your contribution is not deductible.

2018

If you are covered by a workplace retirement plan, your phase out range is as follows:

Singles: $63,000 to $73,000
For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $101,000 to $121,000, up from $99,000 to $119,000.
Married couples filing separately: $0 to $10,000

If you are not covered by a workplace retirement plan, your phase out range is as follows:

Married couples filing separately: $189,00 to $199,000 (if your spouse is covered by a workplace retirement plan)

2017

If you are covered by a workplace retirement plan, your phase out range is as follows:

Singles: $62,000 to $72,000
Married couples filing separately: $99,000 to $119,000 (if the person making the IRA contribution is covered by a workplace retirement plan)
Married couples filing separately: $0 to $10,000

If you are not covered by a workplace retirement plan, your phase out range is as follows:

Married couples filing separately: $186,00 to $196,000 (if your spouse is covered by a workplace retirement plan)

Other Limits

If you are a single or head of household filer and are not covered by a retirement plan at work, you can take the full deduction up to the year’s contribution limit, regardless of your income.

If you’re married filing jointly or separately, and neither spouse is covered by a work-based retirement plan, you can take the full deduction up to your contribution limit, regardless of income.

(Note: If you’re interested in a Roth IRA, those income limits have changed as well. You can get the scoop on Roth IRA limits here.)

SEP IRAs and Solo 401(k)s

Self-employed individuals and small business owners have much higher contribution limits: $55,000 per year in 2018, up from $54,000 in 2017. This is the amount that a self-employed individual or small business owner can contribute to certain retirement accounts, subject to percentage of income limitations.

The table below shows historical changes in SEP IRA and Solo 401(k) contribution limits. The 2018 compensation limit for these accounts is $275,000, which increased from $270,000 in both 2017.

The table below shows these historical changes:

Tax Year	Compensation Limit	Contribution Limit
2018	$275,000	$55,000
2017	$270,000	$54,000
2016	$265,000	$53,000
2015	$265,000	$53,000
2014	$260,000	$52,000
2013	$255,000	$51,000
2012	$250,000	$50,000
2011	$245,000	$49,000

To learn more about SEP IRAs and Solo 401ks, check out this article.

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