Retirement plan contribution limits are evaluated each year and indexed for inflation. Similar to previous years, low inflation rates have stagnated these limits. However, a few numbers have changed for 2018, including the 401(k) limit, which increased by $500, and contribution limits for defined contribution plans, which went up by $1,000.
If you’re not already maxing out your contributions to other plans, you still have an opportunity to save more in 2018. And if you turn age 50 in 2018, you can begin to take advantage of catch-up contributions.
Higher-income taxpayers should also be pleased that some limits on their retirement plan contributions that had been discussed as part of tax reform didn’t make it into the final legislation.
However, keep in mind that there are still additional factors that may affect how much you’re allowed to contribute (or how much your employer can contribute on your behalf). For example, income-based limits may reduce or eliminate your ability to make Roth IRA contributions or to make deductible traditional IRA contributions.
Consistently contributing to a retirement plan can make a big difference when you reach retirement age. For more information about retirement planning or if you have questions about how much you can contribute to tax-advantaged retirement plans in 2018, call us at 949-860-9902 or click here to contact us.