IRA and 401(k) Contributions in 2019
Traditional IRA contributions from earned income are tax deductible. The traditional IRA has two main tax benefits - contributions are tax deductible and grow tax free. If you are covered by a qualified retirement plan at your work place, the IRA deduction may be reduced or phased out.
- Single Taxpayers with Workplace Plans - The IRA contributions for single taxpayers are phased out for taxpayers with income of $64,000 to $74,000.
- Married Couple with Workplace Plans - A couple with joint income of $103,000 - $123,000 will be subject to the IRA phaseout.
- Married and No Workplace Plan - If one spouse does not have a workplace plan and the other spouse is covered in his or her workplace, the phaseout on a joint return is $193,000 to $203,000.
The Roth IRA phaseout limits also increase in 2019.
- Single Individuals - The Roth phaseout for single taxpayers next year will be $122,000 to $137,000.
- Married Couples - For married couples, the Roth IRA phaseout is $193,000 to $203,000.
If your employer offers both a traditional 401(k) and a Roth 401(k) plan, you may allocate your employee contribution to one or both funds. The traditional 401(k) amounts are deductible, but the Roth 401(k) contributions are after-tax.
Many employers match their employees' 401(k) contributions. This is a good way to encourage employee participation in a 401(k) plan. The employer match is used to fund the employees' traditional 401(k) accounts. Employees may still make contributions to Roth 401(k) accounts up to the $19,000 or $25,000 limit.