Retirement Plan Contribution Limits Increase for 2018

For those of you who are contributing to a tax-advantaged retirement account, such as a 401(k), we have some great news: The IRS has increased contribution limits for 2018. Now you can stash $18,500 in your retirement account, on a pre-tax basis, throughout 2018. This new rule also applies to 403(b) accounts, most 457 plans, and Thrift Savings Accounts utilized by federal employees.

The catch-up contribution limit, for savers aged 50 or older, remains unchanged for 2018. You can still save an extra $6,000, bringing your total possible contribution to $24,500 this year if you’re in your fifties or older.

This is good news for you, for a number of reasons. First, there is the obvious benefit of being able to save an extra 500 dollars for retirement. That doesn’t sound like much, but over time compounding interest will help that money to grow. It is always best to save as much as you can!

Second, these types of retirement accounts offer a significant tax value. Since contributions are made on a pre-tax basis, you essentially lower your taxable income by the amount that you stash in your account. This, in turn, lowers your overall tax burden – helping you keep more of your own money in your pocket.

There’s one more thing you should know about retirement plan contribution limits. Some rumors have been circulating that President Trump’s tax plan will slash those limits severely, to as little as $2,400 annually. However, these rumors don’t seem to be panning out, as the President recently stated on Twitter that, “there will be NO change to your 401k…This has always been a great and popular middle class tax break that works, and it stays!” So, you can put those worries out of your mind for now.

With contribution limits increasing, now is a good time to ask yourself whether you’re truly saving enough for retirement. We can help you answer that question, and help you identify other savings and planning opportunities. Give us a call, and we’ll sit down to discuss your needs and devise a strategy for your retirement.