Last updated August 18th, 2019.5 minute read
401k contribution limits are always changing. This is also true for other types of retirement and investment accounts. So, what are the 401k contribution limits for 2019?
And are contribution limits the same for Roth 401k? Let’s take a look.
401k Contribution Limits 2019
Per the IRS, 401k contribution limits 2019 are $19,000. This is up from $18,500 in 2018 – a modest increase.
However, the inflation rate in 2018 was 1.9%. However, the additional $500 represents a 2.7% increase in contribution limits, so this does not merely keep pace with inflation.
$19,000 may sound like a lot of money – and it is. But employer plans such as the 401k have some of the best advantages of any retirement or investment account.
401k Employer Contributions 2019
There is not a limit to the 401k employer contribution limit for 2019. Your employer may contribute as much as they like. The only limit is that total contributions cannot exceed $56,000.
Make sure you take advantage of 401k max contribution to maximize your retirement savings. This is free money and not something you should ignore.
Solo 401k Contribution Limits 2019
Most entrepreneurs have a 401k but not a solo 401k.
Despite the differences in who has a solo 401k, there aren’t many other differences. Just like a “regular” 401k, the solo 401k limit for 2019 is $19,000.
When leveraging a solo 401k, you will probably need to link in your checking account using your routing number. Learn More about routing numbers here:
Can You Contribute to a 401k and an IRA?
In a word: yes, you absolutely can. IRAs have their own limit ($6,000 in 2019).
That said, there is no reason you can’t contribute to both. In general, the best bet is contribute up to your employer match (if you get one).
After that, it will depend on the 401k options you have available. IRAs often offer more freedom in terms of which funds you have available. I usually go for the most broadly diversified funds with the lowest fees.
401k Contribution Limits 2019 Over 50
For those aged 50 and over, the catch-up contribution limit in 2019 is still $6,000.
If you aren’t familiar with catch-up contributions, they allow those 50 and over to contribute additional money to their 401k. Thus, those aged 50 and over can have a total contribution limit of $25,000 in 2019.
Again, there is no reason not to take full advantage of this additional limit for those nearing retirement. Saving more is always better, especially works in their “catch-up” years are nearing age 59 & 1/2, when they can start taking distributions.
Also, there are no other requirements one must meet in order to make catch-up contributions. However, your employer must allow them.
If you are over 50 and your employer allows them, you are eligible to make catch-up 401k contributions.
Roth 401k Limits: Is There a Difference?
Many workers opt to invest in a Roth 401k because this type of account will allow you to withdraw money tax-free in retirement. If you are one of them, you may be wondering whether Roth 401k limits are the same as the traditional 401k.
While things may often seem complicated when it comes to retirement accounts, this one is fairly straightforward.
That’s because Roth 401k limits are also $19,000 in 2019.
In reality, there are not a huge number of differences between Roth 401k vs traditional other than how they are taxed.
Keys to 401k Investing
There are four main strategies you should always leverage when it comes to your retirement:
- Maximize employer matching
- Maximize pre-tax contributions
- Minimize total taxes paid
- Invest for the long haul
These are our main goals. The last one will not necessarily be impacted by how you structure your savings, but the others almost certainly will.
It should also be noted that you might not be able to achieve all of these at the same time. I know I’m not. For example, I am not even coming close to maxing out my pre-tax contributions. But more on that later.
Nevertheless, the closer you can get to achieving all of these goals, the safer and more secure your future will be.
There are also other considerations, such as the amount of the match (if you get one), the funds offered by your employer, whether the funds are “mobile,” and so on.
This mobility idea is actually a very important consideration. You know that phrase “You don’t know what you don’t know?” That could not have been truer for me. With my previous employer, the money they matched on my retirement plan had a time requirement before I was fully vested.
Because I wasn’t fully vested, I lost the entirety of the money. Obviously, I didn’t do this on purpose, but because of that mistake, I lost over $4,000. While it may be difficult or impossible to avoid this scenario, it’s good to at least be aware of the possibility. I wasn’t.
Bottom line: because there are so many variables, you’ll want to meet with someone in HR to discuss all of the options offered by your employer.
401k Contribution Limits 2019 in Summary
Remember that for 2019, 401k contribution limits are $19,000.
This also applies if you have other types of plans such as a 403b and most 457 plans. These plans also have a $19,000 limit for 2019.
The catch-up 401k contribution remains unchanged at $6,000. This applies only to workers aged 50 and over.
Be sure to take advantage of your 401k and all the retirement accounts at your disposal. After all, these are some of the most beneficial retirement accounts!