I’m sure, by now, you’re tired of the “New Year, New You” headlines – it is already mid-January after all! And the markets, despite the US Government shut-down, have actually been brushing off bad news and continuing to inch upward. But, to quote Ayn Rand (one of my favorites), “Money is only a tool. It will take you wherever you wish, but it will not replace you with the driver.” And now is a great time, as we await 1099s and other tax documents (and wait for good weather to return), to hop in the driver’s seat and take a look at changes to various savings plan limits that have increased for 2019.
I’ve listed maximum contribution limits for contributions to 401(k)’s, IRAs, and Health Savings Accounts (HSAs) – a few of the most common and user-friendly savings tools available to you and I today. But numbers are only numbers unless you consider specifically how to apply them. Here are a few Key Takeaways regarding how to apply them to your personal savings plan:
- 401(k) – If you maximize your 401(k) contribution every year as part of your employer’s plan, make sure you increase your contribution amount to take advantage of the 2019 increase. If you’re over 55 y.o., take note of the increase in catch up contributions too.
- IRAs – Contribution limits for both Traditional and Roth IRAs have also increased. If you make monthly contributions with the intent of maximizing this contribution, it’s time to increase that monthly transfer. ALSO, keep in mind that you can make your 2018 contribution to these accounts until April 15th of this year. So, if you’re looking to catch up on your savings from 2018, now is the time to do it. (Keep in mind that if you have a school age child who worked/earned funds in 2018 or will in 2019, you can open a Traditional or Roth IRA in the child’s name and help them begin saving and learning about financial planning as well…)
- HSAs – if you have a high deductible health insurance plan (which are often labelled as such), you can also contribute to Health Savings Accounts (HSAs), which can be VERY valuable savings tools, as several providers of these plans now offer investment options. Like IRAs, the 2018 contributions can be made thru April 15th, 2019.
MAXIMUM CONTRIBUTION AMOUNTS FOR 2018 & 2019: 2018 2019 401(k) Employee Contribution $18,500 $19,000 401(k) Catch-Up (age 55+) $5,500 $6,000 IRA (Traditional & Roth) $5,500 $6,000 IRA Catch-up (age 55+) $1,000 $1,000 HSA (Self-Only) $3,450 $3,500 HSA (Family) $6,900 $7,000 HSA Catch-up (age 55+) $1,000 $1,000
As always, if you have any questions about how to apply these changes to your plan, please give me a call. And Keep Looking Forward!