Happy 2019! With the start of the New Year have come some tax law changes including some options to allow individuals like yourself to save more money towards retirement. So if saving more for retirement is in your list of 2019 resolutions then check out my 2019 IRA FAQs:
1. What is the maximum I can put into my IRA?
As of January 1st, 2019 you can now contribute up to $6K/yr. into an IRA. This is an increase from the 2018 contribution limit of $5,500/yr. Individuals age 50 and over can contribute an additional catch-up contribution of $1K/yr. These contribution limits apply to both deductible and non-deductible IRA contributions.
2. Who can contribute to an IRA?
Anyone can make an IRA contribution of up to $6K/yr. If you want to deduct your contribution though things are a bit trickier.
Individuals with income below $64K covered by a workplace retirement plan can deduct their contribution fully. This is up from the $63K income limit in 2018. There’s a phase-out between $64K - $74K and anyone with income above $74K can’t deduct the contribution. If you’re Married Filing Jointly and covered by a workplace retirement plan then the phase-out is between $103K - $123K up from $101K - $121K in 2018.
If you are not covered by a workplace plan and you don’t have a spouse who’s covered by a workplace plan then you can deduct your contribution.
If you are not covered by a plan, but you have a spouse who’s covered then you can deduct your contribution fully if your income is below $193K and can’t deduct it at all if it’s over $203K. If you’re in between $193K-$203K then you can deduct a portion of your contribution.
3. What is the maximum 2019 Roth IRA contribution limit?
Great news! The Roth IRA contribution limit has increased from $5,500/yr. in 2018 to $6K/yr. in 2019. An additional $1K/yr. catch-up contribution is also available for individuals age 50 and older.
4. Can I contribute to a Roth IRA?
It depends. There are income limits on who can contribute to a Roth IRA. The good news is that the income limits have increased in 2019, but not by much.
If you’re Married Filing Jointly you can contribute if your modified Adjusted Gross Income (MAGI) is below $193K. Above $203K you can’t contribute at all. And if you’re between $193K - $203K you can make a partial contribution.
If you’re filing Single you can contribute if your MAGI is below $122K. Above $137K you can’t contribute at all. And if you’re between $122K - $137K you can make a partial contribution.
Please note that the total IRA contribution of $6K/yr. applies to the total of both your IRA and Roth IRA contributions. So if you max out one type of IRA then you won’t be able to contribute to the other.
As I mentioned earlier these tax laws can be tricky! How do these changes fit into your financial plan? Want to see if we can help you make sense of this? CLICK HERE to see if we can help with your 2019 resolution.
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