Workers can stash away $500 more in their 401(k)s next year.
The IRS announced Thursday that it was increasing the 401(k) contribution limit from $18,000 to $18,500 — the first jump in that ceiling since 2015. The new limits, announced Thursday, also apply to 403(b)s, the majority of 457 plans and the federal government Thrift Savings Plan for 2018.
The feds didn't change the limit for catch-up contributions for employees ages 50 and over, however. That amount still is $6,000.
Contribution limits for traditional and Roth IRA plans also stayed flat at $5,500, with catch-up contributions of $1,000 for those 50 and over.
For those covered by a workplace retirement plan such as a 401(k), the income ranges for IRA deduction phaseouts also changed for 2018.
- For single taxpayers with a workplace retirement plan, the deduction is phased out for those making $63,000 to $73,000, up from $62,000 to $72,000.
- For married couples filing jointly, where the IRA contributor is covered by a workplace plan, the income phaseout range rises to $101,000 to $121,000, from a range of $99,000 to $119,000.
- And for couples where the individual contributor is not covered by a plan, but their spouse is, the income phaseout range climbs to $189,000 to $199,000 from $186,000 to $196,000.
There were increases in the income phaseouts for Roth IRA contributions.
For single taxpayers, the phaseout range is now $120,000 to $135,000, up from $118,000 to $133,000. And for married couples filing jointly, the income phase-out range is $189,000 to $199,000, up from $186,000 to $196,000.
Each year, the IRS assesses contribution limits for pension plans and retirement saving accounts to accommodate for cost of living adjustments. Last year, the IRS made no significant adjustments to either 401(k) or IRA contribution limits.