IRS Announces 2019 Contribution Information

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The IRS recently published important information for self-directed retirement account holders. The following updates are set to take effect in 2019:

Contribution Limit Increases

  • Traditional and Roth IRA Contributions – Traditional IRA and Roth IRA contribution limits will increase by $500 to $6,000 in 2019 (from $5,500 in 2018). The $6,000 limit remains cumulative between all Traditional and/or Roth IRAs held under the same social security number. For example, an account holder with two accounts—a Traditional IRA and a Roth IRA—may contribute a combined total of $6,000 between the two ($3,000 to each account, $6,000 to one and $0 to the other, etc.). $1,000 catch-up contributions are still available to Traditional and Roth IRA holders age 50 or above.
  • HSA Contributions – HSA contribution limits for single high-deductible health plan holders will increase by $50 to $3,500 in 2019 (from $3,450 in 2018). Contribution limits for family high-deductible health plan holders will increase by $100 to $7,000 (from $6,900 in 2018). $1,000 catch-up contributions are still available to HSA holders age 55 or above.
  • SEP IRA Contributions – SEP IRA contribution limits will increase to the lessor of $56,000 in 2019 (from $55,000 in 2018) or 25% of compensation (same as 2018).
  • SIMPLE IRA Contributions – SIMPLE IRA contribution limits (for employees) will increase by $500 to $13,000 in 2019 (from $12,500 in 2018). $3,000 catch-up contributions are still available to SIMPLE IRA holders age 50 or above.
  • Solo 401(k) Contributions – Employees may contribute 100% of their compensation up to $19,000 in 2019 (from $18,500 in 2018). $6,000 catch-up contributions are still available to Solo 401(k) holders age 50 or above.

Modified Adjusted Gross Income (MAGI)

Your ability to fully deduct Traditional IRA contributions may be impacted if your MAGI, marital status, and tax filing status fall under one of the following categories:

  • MAGI = $0 - $10,000 for married individuals who file separate tax returns and participate in employer-sponsored retirement plans (no change from 2018).
  • MAGI = $64,000 - $74,000 for single individuals who file as heads of household and participate in employer-sponsored retirement plans (from $63,000 - $73,000 in 2018).
  • MAGI (combined) = $103,000 - $123,000 for married couples who file joint tax returns with the IRA holder participating in an employer-sponsored retirement plan (from $101,000 - $121,000 in 2018).
  • MAGI (combined) = $193,000 - $203,000 for married couples who file joint tax returns with the IRA holder not participating in an employer-sponsored retirement plan while his or her spouse does (from $189,000 - $199,000 in 2018).

Your ability to make full Roth IRA contributions may be impacted if your MAGI, marital status, and tax filing status fall under one of the following categories:

  • MAGI = $0 - $10,000 for married individuals who file separate tax returns (no change from 2018).
  • MAGI = $122,000 - $137,000 for single individuals who file as heads of household (from $120,000 - $135,000 in 2018).
  • MAGI (combined) = $193,000 - $203,000 for married couples who file joint tax returns (from $189,000 - $199,000 in 2018).

Please remember that you may contribute for the 2018 tax year until April 15, 2019. If you make a contribution for the 2018 tax year during the 2019 calendar year, said contribution will be subject to 2018 considerations. Higher contribution limits for the 2019 tax year will not apply to 2018 contributions regardless of when they’re made. For instance, if you’re under the age of 50, it’s March 2019, and you haven’t made your 2018 Roth IRA contribution, you may contribute $5,500 for 2018 and $6,000 for 2019 at that time.

Visit www.irs.gov for more information and consult with your accountant or tax professional to determine whether or not these circumstances apply to you. For more information about self-directed investing or your alternative investment options, contact New Direction Trust Company at 877-742-1270 or info@ndtco.com.

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