If you’re a business owner choosing a retirement plan can be challenging. Staying on top of it can be even more of a challenge. If 2018 was a great year for your business then you might be looking to increase your retirement contributions this year. Are you wondering “What is the maximum I can save into my Small Business Retirement plan?” If so, then you’ve come to the right place. Here’s a break down of the new contribution limits of some popular retirement plans for SBOs:
SIMPLE IRA employee contribution limits have increased from $12,500/yr. to $13K/yr. along with a $3K/yr. catch-up contribution for individuals age 50 and older.
Individual 401(k) employee contribution limits have increased from $18,500/yr. to $19K/yr. A catch up contribution of $6K/yr. is allowed for individuals that are age 50 and older. (Note that this new limit applies to the total of your pre-tax both and Roth contributions.) An employer contribution is still available up to a maximum total contribution (including employee and employer funding) of $56K/yr. which is up from $55K in 2018.
SEP IRA employer contributions can’t exceed the lesser of 25% of an employee’s income or $56K/yr. (increased from $55K in 2018). Please note that catch-up contributions and employee contributions still aren’t allowed into a SEP IRA.
Now that you know what’s new in 2019 I recommend that you take a look at your financial plan to see if you should adjust your contributions. While you’re at it you should take a look at 2018 to see if you if you’re all set or if you still need to make additional contributions. Many small business retirement plans allow contributions up until the tax deadline (including extensions) so there may still be time to contribute. Do you have a game plan in place for your small business? Need help with your plan for 2018, 2019, or both? CLICK HERE to see if we can help.
The information contained is derived from sources believed to be accurate. However we do not guarantee its accuracy. The information contained is for general use and it is not intended to cover all aspects of a particular matter. Neither the information presented nor any opinion expressed constitutes a representation by us or a solicitation of the purchase or sale of any securities. The information contained is not appropriate, by itself, to guide investment decisions.
The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. Entities or persons distributing this information are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.
All Securities Offered Through The Investment Center, Inc. Member FINRA/SIPC
Advisory Services Provided Through IC Advisory Services, Inc. – An SEC Registered Investment Advisor
Jessica Merino is a registered representative of The Investment Center, Inc. – Merino Wealth Management is not affiliated with The Investment Center, Inc. or IC Advisory Services, Inc..