2019 Retirement Account Contribution Limits

The Internal Revenue Service (IRS) has announced the increased limits you can contribute to your retirement accounts starting in 2019.  This is great news for those of you who are looking to increase your retirement savings.

The last time the IRS updated the retirement contribution limits was in 2013.

2019 Retirement Contribution limit changes for TSP and IRA Accounts

Changes to the Thrift Savings Plan (TSP)

The member contribution limit for TSP accounts is increasing to $19,000 from $18,500 for both traditional and Roth TSP.  This 2.7% increase also applies to anyone with a 401(k), 403(b), and some 457 accounts.

For those of you looking to max out your TSP accounts, this will mean you will need to adjust your contribution percentage to contribute $1,583.33 per month.

For those Service Members and Government civilians who are over the age of 50, the catch-up limit is unchanged at $6,000. This means your maximum TSP contribution is $25,000.

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Changes to the Individual Retirement Account (IRA)

Starting in 2019, the contributions limit for IRAs, both traditional and Roth, will be increased to $6,000 a year from $5,500 a year.

For those of you who use allotments to make monthly contributions to your IRA, they will need to be set to $500 a month to take full advantage of the benefits offered in an IRA account.

For investors over the age of 50, the catch-up limit is unchanged at $1,000.  This means you may contribute a total of $7,000 per years into your IRA accounts.

Phase Out for Individual Retirement Accounts

For most of us in the military, earning enough money to reach the phase-out limits for an IRA account is not an issue.  But should you or your spouse earn money outside of your military paycheck, you may exceed the income limits to be able to contribute at all to an IRA account.  The following are the Adjusted Gross Income (AGI) for IRA phase-outs:

Roth IRA:

The AGI phase-out from being able to participate in a Roth IRA account was increased to $193,000 to $203,000 for those filing jointly and $122,000 to $137,000 for those filing single or head of household.

Traditional IRA:

With Traditional IRAs, there are several determinations to the phase-out limit.

–  If you file as a single taxpayer covered by a workplace retirement plan, the phase-out range is now $64,000 to $74,000.

– If you are married and file jointly, and the spouse who is making the IRA contribution is covered by a workplace retirement plan, the phase-out range is now $103,000 to $123,000.

– If the individual who is the IRA contributor is not covered by a workplace retirement plan but is married to someone who does have a workplace retirement, the deduction is phased out if their combined income is between $193,000 and $203,000.

Bottom Line

With the changes to retirement accounts which take place in 2019, the typical Soldier will be able to invest up to $25,000 between their IRA and TSP accounts.

These changes will allow for significantly bigger growth of your retirement account when the compounded interest has time to grow.  The best way to take the full advantage of compounded interest is to begin investing in your future today.

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