IRS raises retirement plan contribution limits

Employers have some good news to share with employees who may want to start out the New Year on a savings kick: Workers can now contribute more to their retirement accounts in 2019.

The IRS on Thursday increased the pre-tax contribution limits for employees who participate in a 401(k), 403(b) and most 457 plans to $19,000 from $18,500. That limit also applies to the federal government’s Thrift Savings Plan.

For participants ages 50 and over, the additional catch-up contribution limit, which is set by law, will stay at $6,000.

Meanwhile, IRA contribution limits were raised to $6,000 from $5,500 — the first time the IRS has increased the limits since 2013. The catch-up contribution limit for people 50 and over will still be $1,000.

The deferred compensation limit in defined contribution plans for pre-tax and after-tax dollars will increase by $1,000, to $56,000, and the maximum defined benefit annual pension will increase by $5,000, to $225,000.

The increased limits are good news for both employers and their employees who are struggling to get retirement-ready. Research out from Willis Towers Watson earlier this year found that just half of employees surveyed by the consulting firm say they feel confident they have enough money to live comfortably 15 years into retirement, down significantly from 69% in 2015.

The full IRS notice can be found here.