2019 Retirement Plan Cost of Living Adjustments Announced by IRS

The IRS released the 2019 Cost of Living Adjustments for various limitations affecting retirement plans on November 1, 2018.  The changes affect both qualified retirement plan and IRA contributions and benefits.  Highlights of the 2018 adjustments include:

  • Maximum 401(k) contribution increased to $19,000, and the catch-up limit (age 50+) remains $6,000, a total of $25,000 for seniors.
  • Maximum Profit Sharing Plan contribution is increased from $55,000 to $56,000.
  • Maximum Compensation that is considered to determine contributions and benefits is increased from $275,000 to $280,000.
  • Maximum IRA Deduction increases to $6,000 + catch-up of $1,000 ($7,000 for seniors). Deduction for participants in an employer plan is reduced based on AGI.  The AGI threshold is increased $1,000 for singles, and $3,000 for married couples, which allows the full deduction with AGI up to $64,000 for singles, and $193,000 for married couples

Other limitations that have significant impact on contributions and benefits have also been increased. A more detailed description may be found in the tables below.

2019 Qualified Plan Cost of Living Adjustments

Description Code Section 2019
Maximum Annual Payout from a Defined Benefit Plan 415(b)(1)(A) $225,000
Maximum Annual Contribution to a Defined Contribution Plan

 

415(c)(1)(A) $56,000
Maximum Elective Deferrals under §401(k) and §403(b) Plans

 

402(g) $19,000
Catch-up Contributions age 50  (401(k) & 403(b) Plans) 414(v)(2)(B)(i) $6,000
Catch-up Contributions age 50 (SIMPLE Plan) 414(v)(2)(B)(ii) $3,000
Maximum Annual Compensation Taken into Account for Benefits and Contributions under a Qualified Plan 401(a)(17) $275,000
Compensation Test – Highly Compensated Employee 414(q) $125,000
Compensation Test  – Key Employee (Top Heavy) 416(i)(1) $180,000
Government and Tax-Exempt Plans Deferral Limit 457(e)(15) $19,000
Maximum contribution to SIMPLE Retirement Account

SIMPLE Catch-up

 

408(p)(2)

414(v)(2)(B)(ii)

$13,000

$3,000

Maximum Integration Level (SSA Contrib. & Benefit Base) 401(l)(5) $132,900

 2019 Cost of Living Adjustment to IRA Limitations

Description Code Section 2017
Maximum Deductible IRA Contribution 219(b)(1)(A) $6,000
Catch-up IRA Contributions age 50 or over 219(b)(5)(B) $1,000
Maximum Roth IRA Contribution

contribution is reduced for AGI>

 

219(b)(1)(A) $6,000
Roth AGI threshold for married couples

 

408A(c)(3)(c)(B)(ii) $193,000
Roth IRA AGI threshold for all others 408A(c)(3)(c)(B)(ii) $122,000
Maximum contribution to SEP – lesser of 25% of Compensation or

 

415(c)(1)(A) $56,000
Minimum compensation for SEP coverage 408(k)(2) $600
Maximum compensation for SEP 408(k)(3) $280,000

THE DEDUCTIBLE CONTRIBUTION LIMIT IS REDUCED FOR ACTIVE PARTICIPANTS IN AN EMPLOYER SPONSORED RETIREMENT PLAN, BASED ON THE CONTRIBUTOR’S AGI. (Table below) In the case of married taxpayers filing jointly, if one spouse is an active participant, the reduction in the maximum contribution limit is calculated separately for the participant spouse and non-participant spouse.

Reduced Deduction for Active Participant in Employer Sponsored Plan
Deduction

 

Single Married Filing Separately
Full

$5,500

or

$6,500

for Seniors

Not an active participant No active participant Non active participant

< $189,000

Active participant(s)

< $101,000

 

N/A
Partial Active participant phase-out  $64,000 to $74,000 Non-active participant

phase-out

$193,000 to $203,000

Active participant(s)

phase-out

$103,000 to $123,000

phase-out

$0 to $10,000

None Active participant  AGI over $74,000 Non active participant

> $203,000

Active participant(s)

> $123,000

AGI over $10,000

For more information call or e-mail Jeff Bragdon: 412-454-0233,  jbragdon@williamscoulson.com

or Mike Lloyd: 412-454-0225, mlloyd@williamscoulson.com

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