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Now that the 2018 tax year is in the rearview mirror, we can begin to set our sights on 2019. There have been some updates that you may have missed regarding saving for retirement or healthcare in 2019. IRA and 401(k) annual contribution limits were both increased by $500 dollars. In order to take advantage of these increased limits, you may need to update the deferral amount from your paycheck or plan to cut a bigger check for your IRA. In addition to the increased contribution limit, there also is an increase in the income thresholds for being able to claim the credit for qualified retirement savings contributions. This credit encourages lower income individuals to save for retirement, and will not fully phase out until income exceeds $64,000 (married filing joint) beginning in 2019.
In addition to the increases for qualified retirement plans, Health Savings Account (HSA) contribution limits have also increased for 2019. With more and more companies offering HSAs, individuals have plenty of opportunities to take advantage of the tax and savings benefits that these accounts provide. The maximum annual contribution limit has increased to $3,500 for individuals and $7,000 for families. The limit applies to contributions from both you and your employer. As with retirement plans, you may need to update the deferral amount from your paycheck to maximize your contributions.
With the recent changes in tax law that have limited (or eliminated) certain itemized deductions, individuals can still take advantage of the tax benefits of qualified retirement plans and HSAs. With plenty of time still remaining in 2019, consult your GBQ advisor to ensure you are getting the most out of your tax-advantaged savings plans.