We all want a raise. And the good news is that we’re all getting one—at least when it comes to retirement contributions.
Starting in 2019, The Internal Revenue Service (IRS) increased contribution limits on Individual Retirement Accounts (IRAs) and 401(k)s. The cost of living adjustment is the first contribution limit increase in six years.
Here’s what you need to know:
- Annual contribution limits for IRAs will increase to $6,000 from $5,500.
- Annual contribution limits for 401(k)s, 403(b)s, and the Thrift Savings Plan will increase to $19,000 from $18,500.
- “Catch-up” contributions—a higher contribution ceiling specifically for individuals over 50—will stay the same. Those limits are an additional $1,000 for an IRA, and an additional $6,000 for a 401(k).
What it means for you
In a nutshell, the IRS’ decision to increase limits means that you can stash away more for retirement. And if you’re playing catch-up on your retirement savings, the increased limit could amount to some additional savings.
But if you plan to increase your contributions to reach the maximum, you’ll need to take action.
To change your IRA or 401(k) contribution levels, you’ll probably need to manually change your contribution by contacting your account provider. (Remember, a 401(k) is only available through your employer.)
Kick-start your retirement savings
If you don’t have a retirement account, you can sign up for one on Stash.