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2019 IRS Limits Affecting Qualified Plans and IRA’s

IRS Limit Changes

Do you have a retirement or pension plan established for your company? Are you part of your employer’s retirement plan? Do you contribute to an IRA? Do you pay into the social security system? Chances are, unless you are retired, you answered yes to at least one of these questions and you will want to know about changes taking place in 2019.

On an annual basis the IRS will review changes in the Consumer Price Index and make adjustments to the amount that can be contributed to qualified plans, individual retirement accounts, the income limitations for contributing, as well as social security taxable wage base.

On November 1, 2018, the Internal Revenue Service announced cost-of-living adjustments, based on changes to the Consumer Price Index (CPI), affecting dollar limitations for pension plans and other retirement-related items for the 2019 tax year. Many of the pension plan limits are increasing for the 2019 plan year due to Consumer Price Index (CPI) increases.

We are providing you with an overview of the updates to the 2019 IRS limits and how they will change from 2018. You can find a complete overview of the changes by visiting the IRS Notice 2018-83.

 2019 IRS Limits Affecting Qualified Plans & IRA's

PLAN LIMITS

2019

2018

Traditional/Roth IRA Limit

$6,000

$5,500

Traditional/Roth IRA Catch-Up Contribution Limit

$1,000

$1,000

SIMPLE Maximum Annual Elective Deferral Limit

$13,000

$12,500

SIMPLE 401(k) or SIMPLE IRA Catch-Up Contribution Limit

$3,000

$3,000

401(k)/403(b) Elective Deferral Limit

$19,000

$18,500

401(k)/403(b)/Catch-up Limit

$6,000

$6,000

Defined Benefit Plan Dollar Limit

$225,000

$220,000

Defined Contribution Plan Limit

$56,000

$55,000

Annual Compensation Limit

$280,000

$275,000

Highly-Compensated Employee Limit

$125,000

(HCEs in 2020)

$120,000

(HCEs in 2019)

Key Employee Officer Limit

$180,000

$175,000

Social Security Taxable Wage Base

$132,900

$128,400

 

We have some key takeaways that should be reviewed. You may benefit by increasing your contributions for 2019.

  • The Traditional and Roth IRA deferral limits have been increased to $6,000. Be sure to contact your advisor if you are contributing to your account on a periodic basis. You may need to adjust those amounts to coincide with the new limits in order to max out the contribution. The increase from $5,500 was the first time since 2013 that we have seen the contribution limit change.
  • There were no changes to the catch-up contributions for IRA’s, it remains at $1,000.
  • The 401(k) elective deferral limit was raised to $19,000. Be sure, if your intention is to max out, that you have the correct deferral percentage elected.
  • Keep in mind that catch-up contribution limits for employees 50 and over who participate in 401(k), 403(b), most 457 plans and the federal governments Thrift Savings Plan remains unchanged at $6000.
  • The SIMPLE maximum has been increased from $12,500 to $13,000.
  • Catch-up contribution limits for employees 50 and over who participate in a SIMPLE 401(k) or SIMPLE IRA remains unchanged at $3,000.
  • Those that maintain or participate in a Defined Contribution or Defined Benefit plan will want to be familiar with the new dollar, plan, annual compensation, highly compensated employee and key employee limits.
  • The social security wage base has been increased from $128,400 to $132,900. People who earn more than $128,400 will be contributing more to social security than they have in the past. Those beneath that threshold will not see any change in the coming year.

Be sure to discuss these changes with your financial professional and CPA. You may need to make some adjustments to your deferral strategy based upon the new limits released for 2019. It is important to make sure, especially if your intentions are to maximize your contributions, that you are contributing what you need to on an ongoing basis in order to max out your allowable contributions.

We would be happy to answer any questions you may have regarding these changes and how they may impact you. In addition, we would be happy to discuss the benefits of implementing a retirement plan for your business or a retirement account for you personally. Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know needs assistance in this area.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Planning as a Process with Larry Sprung on the Money Savage Podcast

I recently had the opportunity to be a guest on the Money Savage Podcast with George Grombacher.  This podcast gave me the opportunity to discuss how planning is a process and not a one time event.  I hope you find this episode interesting and of value. 

In today's conversation, George and I discuss the following:

1) One of the driving factors that led me to enter the field of Wealth Management

2) How financial education plays a role in your life

3) The importance of planning for your family and buisness

4) My one difference making tip

Money Savage Podcast Larry Sprung

 

 This podacst represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

 

 

Where did my tax refund go?

 

 background bills cash tax refund

 

Does your family rely on your tax refund every year? Do you use your tax refund for a family vacation or use it to pay your real estate taxes for the year? This year is going to be an interesting year for taxpayers who rely on receiving their refund each year, because they may not get one. I bet that got your attention and interest to continue reading.

It is going to be more important than ever to sit down with your CPA and review your year-end tax planning, especially if you have not already. The IRS updated their payroll tax deduction tables earlier this year to better reflect the correct amount of tax withholdings for taxpayers. The new tables reflect the changes in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets. What this means is you may be getting more each week in your paycheck, but at the expense of not over-withholding like you have in the past.

Those of you who have been used to receiving tax refunds each year were receiving them because you withheld more taxes from your weekly paychecks than you needed to. When you file your taxes it is determined how much tax you owe and what you have paid in over the course of the year. Whether the difference is positive or negative will dictate if you get a refund or need to pay. Those that have overpaid taxes over the course of the year will receive a refund and people who have underpaid will owe. Be careful if you are not paying enough into the system during the course of the year as this may cause additional penalties as well.

The ideal scenario would be: your taxes owed and what has been paid wash each other out. Keep in mind, although you may love that refund, you simply provided the government with an interest free loan for the majority of the year.

So why are things different this year? The payroll tax tables have been redrafted to reflect, as closely as possible, the actual taxes owed by the taxpayer. This has increased the amount you are receiving each pay period from your employer and lowered the amount of taxes you are paying into the system. Therefore, when it comes to filing your taxes early next year there is a good chance that you will not be getting the refund you have been accustomed to in previous years because you have received this money all throughout the year.

We see this year, because it is the first year with the new tables, as being a challenge for many CPA’s who work with clients that are unaware of these changes. I can just imagine their clients, who are used to receiving a several thousand dollar refund each year, reaction when they are told their refund is a couple of hundred dollars or worse yet that they owe tax. This is not going to be a pleasant conversation and one that is going to take the CPA time to explain and educate the client. It is not the CPA’s fault, nor did their client pay more in tax (not necessarily the case in all situations) but it was simply a situation where the client received more money all throughout the year.

It is highly suggested that you consult with your CPA now, before their busy season kicks in, and have the conversation so you know where you stand for the year. This will allow you to plan better over the next few months and make decisions that may allow you to improve your tax situation. It also will provide you a few months to make changes to your withholdings if it makes sense for you.

Planning is key and having the right people on your team is just as important. Mitlin Financial assists our clients in having these conversations with their tax advisors and look to help them plan appropriately. We would be more than happy to assist you with any questions that you may have on this topic, including recommending the right tax advisor for you. Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know needs assistance in planning for their taxes.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

 

Seize The Awkward Campaign Receives Large Donation

 5 SPP PR 1440x1024
 
 AFSP Contact: Alexis O’Brien, PR Director, 347-826-3577, This email address is being protected from spambots. You need JavaScript enabled to view it.
 
Seize The Awkward Campaign Receives Large Donation
 
Donation to Support Digital-First PSA Campaign for Young Adults and Led by the Ad Council, JED and the American Foundation for Suicide Prevention
 
NEW YORK (November 8, 2018) – In memory of Keith Milano, who died by suicide in 2004, his family created the Keith Milano Memorial Fund at the American Foundation for Suicide Prevention. This fund contributed a generous donation that was earmarked for the new Seize The Awkward public service campaign. Launched in January, this campaign is an effort to empower young adults to reach out to friends who may be at risk for suicide. The campaign was created in partnership by the Ad Council, The Jed Foundation (JED), and AFSP through the ad agency Droga5.
 
“Since losing Keith and sharing our story we have had so many people reach out for resources. In today’s digital age tweens and teens see and hear about suicide whether we address it with them or not. Parents and educators need to be able to communicate effectively that there is help, support and that asking for help is a sign of strength,” said Denise Sprung, suicide prevention advocate and resident of Smithtown, New York. “This is why we chose to allocate such a large amount from the Keith Milano Memorial Fund to the groundbreaking Seize The Awkward campaign. As a parent, I know how important it is to talk to your kid about their mental health and about suicide.”
 
Seize the Awkward encourages teens and young adults, particularly those ages 16-24, to create a safe space for their friends to open up about mental health challenges. The campaign personifies an awkward silence that can happen between friends before a conversation about mental health, through the character, Awkward Silence, portrayed by actor and Broadway star Gideon Glick. It shows viewers the opportunity that exists in recognizing something is wrong and breaking through an awkward silence between friends – and encourages them to use this moment to check in and ask about mental health.
 
Keith Milano grew up on Long Island where he attended Newfield High School. He went on to the University of Buffalo, and then to Stony Brook University where he graduated with a bachelor’s degree in Geology. After graduation, he worked as a hydrogeologist for EnviroTrac. Denise Milano Sprung, Keith’s older sister by three years, also attended Newfield High School and the University of Buffalo. Denise and her husband Larry run the Keith Milano Memorial Fund in honor of her younger brother. The Sprung family also made a personal donation to Project 2025 and have been generous contributors to AFSP for many years.  
 
 
The Keith Milano Memorial Fund was established to help raise awareness about the devastating deadly disease that is mental illness. Keith’s spirit and laughter is kept alive through our efforts to increase awareness about mental illness and to raise money for education and imperative research. Keith often struggled with society’s perception of mental illness. Our hope is that by having the strength to say that Keith was “Bipolar” we can strip away the stigma and help others to be more open about their disease.
 
About AFSP
 
The American Foundation for Suicide Prevention is dedicated to saving lives and bringing hope to those affected by suicide. AFSP creates a culture that’s smart about mental health through education and community programs, develops suicide prevention through research and advocacy, and provides support for those affected by suicide. Led by CEO Robert Gebbia and headquartered in New York, and with a public policy office in Washington, D.C., AFSP has local chapters in all 50 states with programs and events nationwide. AFSP celebrates 30 years of service to the suicide prevention movement. Learn more about AFSP in its latest Annual Report, and join the conversation on suicide prevention by following AFSP on Facebook, Twitter, Instagram, and YouTube.

The Most Sacred Financial Document

Sacred Document Credit Report and Credit Score

Planning is important to make sure your financial house is in order. It is vital to know where you are today, where you want to be in the future and to have a game plan on how to get there. Many times we overlook one of the most sacred financial documents when devising this plan and that is the credit report.

A credit report is the key or the roadblock to many of the financial decisions we make today. Think about it, large life decisions such as buying a home, a new car, any large purchase on credit, or simply obtaining a credit card rely heavily on this one document and the score that is affiliated with it. Having an excellent credit report and score will allow you the freedom and flexibility to utilize credit most effectively.

There are a couple things you should be doing on a regular basis to make sure your credit report is accurate and your score remains at a peak level.

  • You are entitled to a free credit report every twelve months from each credit reporting company. This will not provide you with your credit score, but should be used as a tool to confirm the information on your report is accurate and current. There are many websites you can go to in order to obtain these reports and annualcreditreport.com is recommended from the Federal Trade Commission’s website.
  • You should check your credit scores annually as well to make sure they have not changed significantly since the last time you checked, especially if you have not had anything adverse happen to your credit. Unlike your credit report, you are not entitled to free access of your credit scores annually. There are a few ways to obtain your credit scores. Some credit card providers (you can check with your current card providers) will provide you with your score and inform you as changes take place with your score for free. In addition, you can always use myfico.com and obtain your score from each of the three bureaus. This option will cost you roughly twenty dollars per bureau, sixty dollars for all three. You can also obtain a free score at www.creditkarma.com, but keep in mind the score you receive here will not provide you with the exact score from the bureaus. It will give you a good sense as to what your credit score is and where you stand versus other people, plus there is no fee for their service.

The credit report and its associated score is the holy grail of lending. It could very well mean the difference between an okay rate, better rate, and the best rate provided to potential borrowers. Depending on the size of the purchase, this difference could mean a savings of tens of thousands of dollars over time. As an example, according to Bankrate’s mortgage calculator the rate currently for a thirty year mortgage with twenty percent down for someone with a 740 plus credit score would be around 4.75%. For someone with a score between 640 and 659, the rate would be 5.375%. At first glance, this may not seem like a huge difference in rate but it would mean a $45,000 increase in cost assuming you purchase a $400,000 home and finance $320,000. That is real money and having the best credit score will save you every time you borrow.

I simply provided you with one example of where a great credit report and score will save you money, but think of the other times we borrow money. Imagine if you compound the savings mentioned above (for purchasing the house) and you saw similar savings when buying a car, paying for a child’s education, utilizing home equity for renovations, credit card rates and other ways of borrowing too. Not having the best rate could mean the difference in reaching your goals.

Making sure your credit report is accurate and you are maintaining an excellent credit score is vital to your financial success. We would be more than happy to assist you with any questions that you may have on this topic, including discussing your credit report and score. Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know needs assistance in this area. 

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

 

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