2018 Retirement Account Limits

June 6, 2018
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How much can you contribute this year?

In 2018, you have another chance to max out your retirement accounts. Here is a rundown of yearly contribution limits for the popular retirement savings vehicles.

IRA’s. The 2018 limits are the same as in 2017: $5,500 for IRA owners who will be 49 and younger this year and $6,500 for IRA owners who will be 50 or older this year. These limits apply to both Roth and traditional IRA’s.

What if you own multiple IRA’s? This $5,500/$6,500 limit applies to your total IRA contributions for a calendar year. So, for example, should you happen to have five IRA’s, you could make an equal contribution of $1,100 (or $1,300) to each of them in 2017 or unequal contributions to them not exceeding the applicable $5,500/$6,500 limit. Keep in mind that you can fund your IRA until the federal income tax deadline. High earners may find their ability to make a full Roth IRA contribution restricted. This applies to a single filer or head of household whose adjusted gross income falls within the $120,000-135,000 range and to married couples whose AGI’s land between $189,000-199,000. If your AGI exceeds the high ends of those phase-out ranges, you may not make a 2018 Roth IRA contribution. (For tax year 2017, the respective phase-out ranges are $118,000-133,000 and $186,000-196,000.)

401(k)s, 403(b)s, and 457s. Each of these employee retirement plans have 2018 contribution limits of $18,500. The 2018 contribution limit is $24,500, however, if you will be 50 or older this year – that means you are eligible to make a “catch-up” contribution of up to $6,000 above the usual limit. Both 403(b) and 457(b) plans offer savers special catch-up contribution opportunities. If you participate in a 403(b) plan, you can also opt to take advantage of its 15-year rule: if you have 15 or more years of tenure and your average yearly contribution to the plan has been $5,000 or less, you can direct an extra $3,000 per year into the plan. If you are enrolled in a 457(b) plan sponsored by a state or local government agency, you can contribute up to double the standard annual limit each year if you are within three years of normal retirement age (as the plan defines). In 2017, that meant that you could put up to $36,000 into your 457(b) plan in that circumstance; in 2018, the limit becomes $37,000. You can make this “double contribution” and the standard catch-up contribution of up to $6,000 if you are 50 or older in 2018.

SIMPLE IRA and SEP-IRA. In 2018, the contribution limit for a SIMPLE IRA is $12,500; those who will be 50 or older this year may contribute up to $15,500. Business owners need to match these annual employee contributions to at least some degree. Self-employed individuals can contribute as an employee and employer to a SIMPLE IRA.  Business owners and the self-employed can also contribute to SEP-IRAs. All contributions to these accounts have to come from the business, and all contributions are tax deductible. The annual contribution limit on a SEP-IRA is very high – in 2018, it is either $55,000 or 25% of the business owner’s net self-employment income, whichever is lower.

At HFG Wealth Management, we embrace a method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

“The information contain herein is general in nature and may not be suitable for everyone. We encourage you to give us a call, to discuss your specific situation and to help determine the appropriate course of action.”

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Copyright © 2018. HFG Wealth Management, LLC. Investment advisory services offered through HFG Wealth Management, LLC – An independent Registered Investment Advisory firm registered with the SEC. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Therefore, any information presented here should only be relied upon when coordinated with individual professional advice. [ more disclosures ]