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The maximum 401(k) contribution is going up

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The Internal Revenue Service (IRS) announced it is increasing the amount you can contribute to your workplace retirement plan.

The contribution limit for retirement savings accounts, including 401(k), 403(b) and the majority of 457 plans, has increased to $18,500 from $18,000. The last contribution limit increase was in 2015.

The IRS did not increase the limit for catch-up contributions for individuals over age 50 or contribution limits for traditional and Roth IRA plans.

401(k), 403(b) and most 457 plans

  2018 2017
Individuals $18,500 $18,000
Catch-up contributions (age 50+) Additional $6,000 Additional $6,000

Roth and traditional IRA contribution limits

  2018 2017
Individuals Up to $5,500 (must have employment compensation) Up to $5,500 (must have employment compensation)
Catch-up contributions (age 50+) Additional $1,000 Additional $1,000

Contact your advisor to discover the benefits of increasing your contribution to your employer-sponsored retirement plan in 2018.

Source: Internal Revenue Service, Oct. 19, 2017.

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Associated Tags: Retirement, 401k, IRS

This information is provided for informational and educational purposes only  and may include references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to assist in understanding the issues discussed. Waddell & Reed does not provide tax advice. Waddell & Reed believes the information has been obtained from sources considered to be reliable, but does not guarantee the accuracy of the information provided. 

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