In November, the IRS announced new contribution limits for individuals with 401(k), 403(b), and IRA accounts due to cost-of-living adjustments.
Those with 401(k) and 403(b) accounts will have their contribution limits increase to $19,000 from $18,500, while IRA contribution limits will increase to $6,000 from $5,500.
The “catch-up” contribution limit for individuals aged 50 and over did not increase and remains $1000 for IRAs and $6000 for 401(k)s.
What does this mean for you and your account?
While $500 may not sound like a large increase, it can make a big difference over time. According to the New York Times, an extra $500 in your 401(k) can yield about $47,000 in savings over 30 years.
If you have a 401(k) or another employer sponsored plan, you may want to consider increasing your payroll contributions in 2019. If not, you can still increase your IRA contributions.
If you aren’t sure about how much to add to your 401(k) contributions, you can reach out to your human resources department for an estimate on your current contributions to see if there’s room for more.
While the financial reality for many Americans won’t allow them to make maximum contributions, individuals already making the maximum contribution will have room to improve.
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https://www.nytimes.com/2018/11/09/your-money/401k-contribution-limits-raised-irs.html
