Each year in October, the IRS announces the cost-of-living adjustments (COLAs) that will apply to retirement savings plans for the following calendar year. This chart provides the IRA limits for 2019 and shows how the limits have changed over the past few years. In some years, the increase in the cost-of-living index does not meet the statutory thresholds that trigger increased limits. For 2019, most of the limits increased.
Cost of Living Adjustments
|Active participant, married, joint filer tax deduction phase-out range||$103,000–$123,000||$101,000–$121,000||$99,000–$119,000|
|Active participant, single filer tax deduction phase-out range||$64,000–$74,000||$63,000–$73,000||$62,000–$72,000|
|Joint filer, married to active participant tax deduction phase-out range||$193,000–$203,000||$189,000–$199,000||$186,000–$196,000|
|Married, joint filer eligibility phase-out range||$193,000–$203,000||$189,000–$199,000||$186,000–$196,000|
|Single filer eligibility phase-out range||$122,000–$137,000||$120,000–$135,000||$118,000–$133,000|
|SEP IRA PLAN||2019||2018||2017|
|Maximum employer contribution||$56,000||$55,000||$54,000|
|SIMPLE IRA PLAN||2019||2018||2017|
|Maximum employee contribution||$13,000||$12,500||$12,500|
Making Traditional, Roth, SEP & SIMPLE IRA Contributions for 2019
Traditional IRA – The maximum amount you may contribute to an IRA for 2019 is the smaller of 100% of your compensation or $6,000. If you are age 50 or older, you have the option of making a “catch-up” contribution of up to $1,000 each year. The maximum annual contribution limit applies in aggregate to all of your Traditional and Roth IRAs.
Traditional IRA contributions are generally fully deductible unless you or your spouse is covered by an employer’s retirement plan, such as a 401(k) plan. If you or your spouse is participating in an employer plan, the deductibility of your Traditional IRA contributions will depend on whether your modified adjusted gross income (MAGI) exceeds the limits listed in the above chart. For example, if you are married, filing a joint tax return, and are participating in a 401(k) plan at work in 2019, your annual IRA contribution will be fully deductible if your MAGI is under $103,000, and partially deductible if your MAGI is between $103,000 and $123,000. If your MAGI is $123,000 or higher, your Traditional IRA contributions will not be deductible.
Roth IRA – The maximum amount you may contribute to a Roth IRA is the same as for Traditional IRAs: the smaller of 100% of compensation or $6,000. You have one limit for both Traditional and Roth IRA contributions each year. Individuals who are age 50 or over can make an additional $1,000 contribution.
If you have MAGI above a certain level, however, you are not eligible to make a Roth IRA contribution for the year. For example, if you are married and filing a joint tax return for 2019, you may contribute the full amount to a Roth IRA if your MAGI is less $193,000. If your MAGI is between $193,000 and $203,000, you may make a partial contribution. If your MAGI is $203,000 or higher, you cannot contribute to a Roth IRA for 2019.
IRS Publication 590-A, Contributions to Individual Retirement Arrangements, contains worksheets you can use to calculate Traditional IRA deductions and Roth IRA eligibility (www.irs.gov).
SEP Plan – Only the employer sponsoring the SEP plan may make SEP plan contributions. The maximum limit on contributions is of the lesser of 25% of an employee’s compensation or $56,000 for 2019. Only compensation up to $280,000 can be considered for contribution calculations. SEP plan contributions are made to an individual’s traditional IRA.
SIMPLE IRA Plan – Both employees and employers may make contributions to a SIMPLE IRA under an employer’s SIMPLE IRA plan. Employees may defer up to $13,000 for 2019, plus an additional $3,000 if the employee is age 50 or older. Employer contributions may either be matching contributions or non-elective contributions. Matching contributions may only be calculated on compensation up to $280,000 for 2019, but non-elective contributions are not subject to this limit.
For a full list of IRA contribution limits, visit STRATA’s IRA Annual Limits.