The Internal Revenue Service (IRS) has released their retirement plan limits for 2018. Lord Abbett believes the information provided to be an accurate statement of current rules; however, prospective investors should consult with an investment professional and/or tax advisor.
Read on for a summary of changes, or view the entire document here.
2018 Retirement Plan Limits In Brief:
- The contribution limit for employees who participate in a 401(k) or 403(b) plan has increased from $18,000 to $18,500.
- For SIMPLE IRAs, the contribution limit is unchanged at $12,500.
- Traditional and Roth IRA accounts maintain the same contribution limit, $5,500, as in 2017; however, the income limits for investing in a Roth IRA have changed for 2018. Visit IRS.gov to find out if your income makes you ineligible to contribute to a Roth IRA in 2018).
- “Catch-up” contribution limits remain unchanged for 401(k), 403(b), and 457 plans as well as SIMPLE, Roth and Traditional IRA accounts. To be eligible for a "catch-up" contribution, an individual needs to turn 50 by December 31 of the applicable year.
Savers Retirement Tax Credit
- The income limit for the saver’s credit, a nonrefundable federal income tax credit available to individuals with an adjusted gross income (AGI) of less than $63,000, has increased from $62,000 for couples filing jointly. Salary-deferral contributions to a 401(k), 403(b), governmental 457(b), SIMPLE IRA, and SAR SEP can reduce an individual’s AGI, creating Saver’s Tax Credit eligibility. In addition, the credit is available for contributions to a traditional or Roth IRA. The maximum annual contribution eligible for the credit is $2,000, and the maximum credit is 50%, making the maximum saver’s credit $1,000.
For additional details, including the contribution, income, and deductibility limits for traditional IRA, Roth IRA, and Coverdell ESAs, review the complete article from Lord Abbett, or read our article about retirement investing options for high-income earners.
Contact us to learn more about money managers such as Lord Abbett and Company, LLC, or to consult with a knowledgeable Investor Consultant about your retirement plan. Give us a call at 1-800-541-7774 or email us.
