2019 Planning: Changes to Retirement Plan Limits, Medicare, and Social Security

As 2019 is underway, it’s important to review changes that impact investors – both accumulators and retirees. For those who are still working, the IRS recently released contribution adjustments for retirement accounts, like 401(k) plans and IRAs. There were also slight adjustments to Health Savings Accounts (HSA), if you are on a high deductible health plan. See the chart below for the new 2019 contribution limits:

Retirement Plans

It’s important to note that the annual IRA contribution limit is comprehensive. You can contribute to a Traditional and Roth IRA in the same year, but the total cannot exceed $6,000 ($7,000 if you’re over age 50). Roth IRA contributions are limited based upon income. If you are single, the income phase-out range is $122,000 to $137,000. If you’re married, the phase-out limit is between $193,000 – $203,000.

Retirees will also see changes related to Social Security and Medicare. Social Security benefits will receive a 2.8% cost-of-living adjustment (COLA) for 2019. According to the AARP, this is the largest COLA adjustment in 7 years. The typical Social Security recipient will see their annual benefit increase by $468.

However, Medicare Part B premiums have also increased, which slightly dampens this Social Security COLA adjustment. Part B premiums have increased from $134/month in 2018 to $135.50/month for 2019. The annual deductible for Part B also increased from $183/year to $185/year for 2019. Medicare recipients typically pay 20% of covered medical services after the annual deductible has been met. The use of a Supplemental or Medicare Advantage plan can further manage these ongoing medical expenses each year.

Medicare Changes

If you are enrolled in Medicare and receiving Social Security benefits, your Part B premium will be automatically deducted from your Social Security benefit amount. If you are not receiving Social Security but are enrolled in Medicare, you make your premium payments directly to Medicare.

These are small adjustments but important items to be mindful of heading into the new year. If you’re curious about how these will impact your current situation and/or you wish to review your financial plan, please contact us to schedule a time to discuss.

Will Goodson

Will is a senior advisor who designs financial plans and investment strategies for clients. He is a University of Texas graduate and a CERTIFIED FINANCIAL PLANNER™ professional. Additionally, Will has obtained the National Social Security Advisor (NSSA®) designation and works closely with wealth management clients to determine the most optimal strategies for taking Social Security and Medicare.

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