Every year, the U.S. government changes a variety of investment and benefits thresholds based on the inflation rate. But since inflation has been relatively tame, most of the changes have been modest these past ten years.
That changes this coming year.
Start with 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.
Meanwhile, the IRS has raised the contribution limit for IRA accounts—that is, the maximum amount that can be contributed—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 contributing is phased out starting at $64,000 in income (single) or $103,000 (filing jointly)—or $10,000 for someone married filing individually....