On November 1, 2018 the Internal Revenue Service in Notice 2018-83 announced the cost-of-living adjustments that apply to dollar limits for retirement plans for the tax year beginning on January 1, 2019. As widely anticipated, due to an increase in the cost of living, as measured by the Bureau of Labor Statistic’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the period covering the third quarter of 2017 to the third quarter of 2018, most limits experienced modest increases with a few remaining at the same level.
Notably, the IRA limit is higher by $500, now at $6,000, the last increase to IRA amounts was in 2013. Salary deferral contribution amounts to 401(k), 403(b), and 457 plans are also up to $19,000. Earlier, on October 11, the Social Security Administration announced a 2.8% cost of living adjustment to benefits, the largest increase since 2012, resulting in a $468 annual increase of benefits on average. On the other hand, the Taxable Wage Base increased from $132,900 to $128,400, $4,500 per year. This results in a monthly $46.50 Social Security tax increase year-over-year for those with earned income at or above the limit; the new maximum is now $16,479.60, up from $15,921.60 in 2018. As before, we have highlighted the year-over-year changes for easy identification
If you would like to establish a financially secure plan for retirement or find out if your'e on track to reach your goals. Please contact us today to schedule a call at [email protected]