2019 Changes to Retirement Plan Contribution Limits and Social Security Benefits

Inflation Effect on Social Security Benefits

The U.S. government changes a variety of investment and benefits thresholds based on the inflation rate. This happens every year. But since inflation has been pretty tame, most of the modifications have been meek these past ten years.

We’ll see more significant changes this coming year.


2019 Retirement Plan Contribution Limits

For starters, the tax-deferred savings thresholds. The limit for 401(k) or 403(b) contributions will rise from $18,500 to $19,000—and employees 50 and older will continue to be able to contribute an additional $6,000 as a ‘catch-up’ provision. The overall limit for defined-contribution plans increased from $55,000 to $56,000.

Added to that, the IRS has elevated the contribution limit for IRA accounts for the first time in six years, from $5,500 to $6,000. Traditional IRA contributions are tax-free (you get a deduction on your tax return) if you aren’t contributing to an employer-sponsored plan. If you are, then the deduction for making a contribution is phased out starting at $64,000 in income (single) or $103,000 (filing jointly)—or $10,000 for someone married filing individually.

Roth contributions are also now capped at $6,000, but your ability to contribute phases out completely at $137,000 of income (single) or $203,000 (filing jointly—or, once again, $10,000 for someone married filing individually.


2019 Social Security Changes

2019 will also see Social Security beneficiaries receiving their biggest cost of living adjustment in seven years—up 2.8% from last year’s benefits, which beats the 2.0% increase given out in 2018. That means that in 2019, a retired worker reaching full retirement age would receive a maximum of $2,861 a month—an increase of $73 a month, or $876 a year. On average, Social Security beneficiaries will receive an additional $39 a month.

The age that Social Security defines as “full retirement age” will also increase by two months, to 66 years and six months for people who will turn 62 in 2019. The full retirement age will increase in 2-month increments over the next two years until it reaches age 67 for everyone born in 1960 or later.

Those paying into the Social Security system will also see an adjustment. Next year, earned income up to $132,900 (up from $128,400) will be subject to the 6.2% Social Security payroll tax—which basically means an increase of $279 for people who earn the maximum. (Income above this amount is exempted from Social Security’s payroll tax—an estimated $1.2 trillion altogether.)


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  1. 7 Changes to Social Security in 2019,”Sean Williams, The Motley Fool, Oct. 28, 2018.
  2. You can contribute more to your 401(k) and IRA in 2019,” Alessandra Malito, MarketWatch, Nov. 17, 2018.
  3. Social Security Changes Coming in 2019,” Emily Brandon, U.S. News, Oct. 15, 2018.