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2019 Contribution and Deduction Limits

Are you saving enough for retirement? If you don’t regularly increase your contribution amounts, you may not be.

“When you save the same amount year after year, your savings rate actually decreases over time due to inflation,” says Hayden Adams, CPA and director of tax and financial planning at the Schwab Center for Financial Research. “Fortunately, contribution limits for tax-advantaged accounts increase periodically, which can help preserve your purchasing power down the road—provided you take advantage of them.”

Below you’ll find the 2019 contribution limits for a variety of popular savings accounts and brief explanations of how contributions to each can affect your tax bill.

 

 

2019 contribution limits

Increase from 2018 Tax implications
401(k), 403(b) and 457 plans $19,000 ($25,000 if age 50+)1 $500 Contributions reduce your taxable income dollar for dollar up to the annual limits.
Health savings accounts (individuals) $3,500 ($4,500 if age 55+) $50 Contributions reduce your taxable income dollar for dollar up to the annual limits.
Health savings accounts (families) $7,000 ($8,000 if age 55+) $100 Contributions reduce your taxable income dollar for dollar up to the annual limits.
Roth individual retirement accounts (IRAs) $6,000 ($7,000 if age 50+)2 $500 Contributions do not reduce your taxable income, but distributions in retirement are completely tax-free.3
SIMPLE 401(k)s and SIMPLE IRAs $13,000 ($16,000 if age 50+)4 $500 Contributions reduce your taxable income dollar for dollar up to the annual limits.
Traditional IRAs $6,000 ($7,000 if age 50+) $500 Contributions reduce your taxable income, so long as your modified adjusted gross income doesn’t exceed certain limits. Your deduction may be reduced if you or your spouse participates in a workplace retirement plan.5

 

1For individuals who participate in multiple workplace retirement plans, the aggregate total contributions cannot exceed these amounts.

2Single filers must have a modified adjusted gross income under $137,000 to contribute to a Roth IRA, and contributions are reduced starting at $122,000. For those married and filing jointly, the figures are $203,000 and $193,000.

3Account holder must be age 59½ or older and have owned the account for at least five years in order to qualify for tax-free income distributions.

4See footnote 1.

5For full details, see irs.gov/retirement-plans/ira-deduction-limits.

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Important Disclosures:

This information does not constitute and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

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