After several years without changes, the contribution limit for certain retirement plans has increased for 2018. There is no change to the contribution limit for individual retirement accounts (IRAs) or SIMPLE plans (see “2018 Retirement Plan Contribution Limits” chart).
Taxpayers who do not have access to a retirement plan at work generally can deduct their full traditional IRA contributions. For those who do have a retirement plan at work, eligibility to deduct contributions phases out at certain income levels. Here are the limits for 2018:
|Filing status||Phase-out to deduct IRA contributions|
|Single and head of household; covered by a workplace retirement plan.||$63,000-$73,000|
|Married couples filing jointly; spouse making the IRA contribution is covered by a workplace retirement plan||$101,000-$121,000|
|Married couples filing jointly; the IRA contributor does not have a workplace plan but spouse does||$189,000-$199,000|
|Married individual filing separately and covered by a workplace retirement plan||$0 to $10,000|
Eligibility to contribute to a Roth IRA is limited by income. Here are the 2018 phase-out limits:
• Single and head of household: $120,000–$135,000
• Married filing jointly: $189,000–$199,000
• Married filing separately: $0–$10,000
Important note: Although income eligibility limits apply to Roth IRA contributions, individuals may open a traditional IRA and convert it to a Roth IRA. There is no income limitation on Roth IRA conversions. However, ordinary income taxes will be due upon the conversion.
The income limit to be eligible for the Saver’s Credit for 2018 has also increased to:
• $63,000 for married couples filing jointly
• $47,250 for heads of household
• $31,500 for single filers and married individuals filing separately
Be sure to consult with a tax advisor or attorney to determine your eligibility and tax deductibility and stay abreast of any tax law changes that may affect retirement savings plans in the future, or contact your Seaside Client Advisor for more information.
|401(k)/Roth 401(k)*||403(b)/Roth 403(b)*||457/Roth 457*||Thrift Savings Plan/Roth TSP*||IRA/Roth IRA**||SIMPLE*|
|Limits on employee contributions (2018)||$18,500 (up from $18,000 in 2017)||$18,500 (up from $18,000 in 2017)||$18,500 (up from $18,000 in 2017)||$18,500 (up from $18,000 in 2017)||$5,500 (no change from 2017)||$12,500 (no change from 2017)|
|Maximum catch-up contribution (age 50+)||$6,000 (no change from 2017)||$6,000 (no change from 2017)||$6,000 (no change from 2017)||$6,000 (no change from 2017)||$1,000 (no change-not subject to indexing)||$3,000 (no change from 2017)|
Tags: 2018, contribution limits
* Contributions to employer-sponsored retirement plans are generally made on a pre-tax basis. Contributions to Roth accounts are after-tax. There is no Roth SIMPLE account.
** Traditional IRA contributions are generally fully tax-deductible unless the IRA contributor or his or her spouse participates in an employer-sponsored retirement plan. In that case, deductibility is limited by income. Roth IRA contributions are never tax-deductible. However, qualified distributions are tax-free.
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