There’s good news for 401(k) savers in 2018: They can put $500 more into their plan.
The IRS has announced that the 401(k)contribution limit has been raised to $18,500. That is the first increase since 2015.
The new limit also applies to 403(b), Thrift Savings Plan and 457 plans.
The limit on catch-up contributions for employees age 50 and over remains the same at $6,000.
The deduction phase out limit was also increased. This means that if your Modified Adjusted Gross Income exceeds certain ranges, the amount you can deduct is reduced (or phased out).
Single taxpayers: The phase out is $63,000 to $73,000, up from $62,000 to $72,000.
Married filing jointly: Phase out rises to $101,000 to $121,000, up from $99,000 to $119,000.
Individual contributors: The phase out range rises to $189,000 to $199,000, up from $186,000 to $196,000.
Roth IRA and traditional IRAs
There was no change in contribution limits for IRA and Roth IRA plans. The maximum you can contribute to a Roth IRA is $5,500 per year (or $6,500 if you are age 50 or older).
There was a change to deduction phaseouts, though. If your Modified Adjusted Gross Income exceeds certain ranges, the amount you can deduct is reduced (or phased out). In 2018, the phase-out levels are higher. For singles or heads of households, the Modified Adjusted Gross Income range is $120,000 to $135,000. For married couples filing jointly, the range is $189,000 to $199,000. The phase-out ranges for married filing separately have not changed.