Oliver S. Berryhill Blogs: 401k and IRA Contribution and Deduction Limits for 2019

In 2019, 401k contribution limits have gone up, and even IRA contribution limits have changed for the first time in several years. Here are all the details, including IRA deduction limits.

401k contribution limits

The IRS released the new 2019 401k and IRA contribution and deduction limits. The limits for 401ks jumped by $500 to $19,000, the second increase since 2015. And contribution limits for IRAs have increased by $500–the first increase they have seen since 2013! Here are the details.

401(k) Contribution Limits

As announced by the IRS, the contribution limit for 401(k) accounts increased from $18,500 in 2018 to $19,000 for 2019. Those 50 or older also get the catch-up contribution of $6,000. That brings the total contribution limit to $25,000 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
2019	$19,000	$6,000
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 $6,000 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 2019 is $6,000. 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
2019	$6,000	$1,000
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 the limits based on whether or not you are covered by a retirement plan at work in 2019:

You Are Covered by a Retirement Plan

In this scenario, if you are covered by a retirement plan at work, you’ll need to know your modified adjusted gross income. Here are the income and phase out limits based on your tax filing status:

If you are filing as single or head of household and your MAGI is $64,000 or less in 2019, you can deduct up to the full contribution limit to your IRA. If your income is between $64,000 and $74,000, you can take a partial deduction for your contributions. And if your income is above $74,000, you cannot take a deduction for IRA contributions.
If you are married filing jointly or a qualifying widow(er), you can take a full deduction if your income is under $103,000. If your income is between $103,000 and $123,000, you can take a partial deduction, and you get no deduction if your income is more than $123,000.
If you are married filing separately, you can take a partial deduction if your MAGI is less than $10,000, but get no deduction if your income is above that amount.

You Are Not Covered by a Retirement Plan

What if you don’t have a work-sponsored retirement plan to contribute to? In this case, the limits are more relaxed:

If you are single, head of household, or a qualifying widow(er), you can deduct up to the contribution limit for 2019 when you contribute to a traditional IRA.
If you are married filing jointly or separately and your spouse also does not have a work-sponsored retirement plan, you can also deduct the full deduction up to the contribution limit.
If you are married filing jointly and your spouse does have a work-sponsored retirement plan, you can take the full deduction only if your combined MAGI is $193,000 or less. If your MAGI is between $193,000 and $203,000, you can take a partial deduction for IRA contributions. And if your income is above $203,000, you can take no deduction for IRA contributions.

If you are married filing separately with a spouse who is covered by a work-sponsored employment plan, you can take a partial deduction if your MAGI is $10,000 or less. If your MAGI is more than $10,000, you cannot take a deduction at all.

(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 have a broader range of options they can use for saving for retirement, including SEP IRAs and Solo 401(k)s. These plans allow participants to contribute a higher percentage of their income or dollar amount, and some plans also offer the option to put in employer-contributions on behalf of the business.

In 2019, those with an SEP IRA can contribute the lesser of 25% of their total compensation or $56,000. The total compensation limit for 2019 is $280,000. For a Solo 401(k), an business owner can contribute up to $19,000 in 2019 as an employee, or up to $25,000 if their are age 50 or over. Then they can add additional money as the employer–up to 25% of their compensation.

You can learn more about these plan options in this article.

The table below shows these historical changes for SEP IRAs:

Tax Year	Compensation Limit	Contribution Limit
2019	$280,000	$56,000
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

How Good is Your 401k?

Have you ever wondered just how much your 401k costs you? Retirement accounts can have hidden fees that drain the value of your account. Over a number of years, these fees can cost you thousands of dollars.

With Personal Capital’s Retirement Fee Analyzer you can see just how much your 401k and other investments are costing you. I was shocked to learn that the fees in my 401(k) could cost me over $200,000!