As you prepare for the new calendar year, one resolution that we often make it to is to take steps towards enhancing our financial future. As we work with clients towards putting plans in place, we are often asked what are the biggest influencers on reaching retirement goals. The number one influencer on achieving long term goals is making regular savings a priority. Achieving market-like returns along with regular savings is what helps achieve long term financial goals. Regular savings, versus ad-hoc lump sum contributions to savings also helps smooth out the influence that timing has on the achievement of goals.
Additionally, tax-deferred savings (IRA, 401k, 403b etc.) and tax free savings (Roth IRA, Roth 401k) also have significant benefits and are often the first priority for dollars allocated towards savings.
The IRS reviews qualified plan limits each year and increases them periodically to keep up inflation. Generally, the IRS will increase the limits by $500 increments when warranted. This year some important updates were made to these limits. The most noteworthy one was the increase in annual IRA limits from $5,500 to $6,000, the first increase since 2013, with the over age 50 catch up contribution remaining at $1,000. Employer plan limits also increased from $18,500 to $19,000, with the catch up contribution of $6,000 remaining level. The IRS also updated income limits associated with eligibility for plan types.
Along with these 2019 updates, don’t forget that if you haven’t made 2018 contributions to your IRAs, you may do so before the April 2019 tax-filing deadline. Please contact your advisor to review your situation to ensure that you are taking full advantage of the qualified retirement plans that make sense for your personal financial picture.
We’ve attached the IRS Update below for review.