Last Thursday the IRS announced that the 401(k) contribution limit for 2018 will increase from $18,000 to $18,500 — the first time the limit has increased since 2015. The new limits also apply to 403(b)s, most 457 plans and the federal government Thrift Savings Plan (TSP).
The limit for catch-up contributions for employees ages 50 and over will remain at $6,000. Contribution limits for traditional, Roth, and SIMPLE IRA plan also remain unchanged.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. The new phase-out ranges for 2018 are as follows:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is $63,000 to $73,000, up from $62,000 to $72,000.
- For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $101,000 to $121,000, up from $99,000 to $119,000.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $189,000 and $199,000, up from $186,000 and $196,000.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.