The biggest no-brainer for 2019 tax planning
We’re in the new year now. and it’s never too early to start saving taxes. The reason we call this the “no-brainer” of tax planning is simple.
- Amounts that are timely contributed to your Simple-IRA, 401(k), SEP-IRA, etc. are fully deductible,
- These amounts enjoy tax-deferred growth (the 8th wonder of the financial world),
- You can use an IRS-approved prototype which means IRS can’t question the deduction,
- and (best of all) you get to keep all the money even after you’ve deducted it!
So ask yourself, could it get much better than this?
Every business client that we work with is aware of the above, but what’s easy to forget is that you need to adjust the amounts going into these retirement plans when the limits are increased!
A summary of the 2019 pension limitations as compared to 2018 is as follows. These increases apply to you, your family members employed by your business, and your team members.
| Plan Maximum Contribution Limits | 2018 | 2019 |
| Section 401(k) Plan or SAR SEP | $18,500 | $19,000 |
| Section 403(b) Plan | $18,500 | $19,000 |
| Section 408(p)(2)(E) SIMPLE Plan Contributions | $12,500 | $13,000 |
| IRAs (if 50 or older add $1,000) | $5,500 | $6,000 |
| Section 415 Limit for: | ||
| Defined Contribution Plans | $55,000 | $56,000 |
| Defined Benefit Plans | $220,000 | $225,000 |
| Catch up amounts (if 50 or older) | $6,000 | $6,000 |
| Key Employee Section 416(i)(1)(A)(i) | $175,000 | $180,000 |
| SEP Compensation SEP Maximum |
$220,000 $55,000 |
$224,000 $56,000 |
| HSA-Health Savings accounts (family) | $6,900 | $7,000 |
| HSA-Health Savings accounts (single) HSA-Catch up (if 55 or older) |
$3,450 $1,000 |
$3,500 $1,000 |