You can put more in your 401 (k) and IRA for 2019

Savers can put more money into their retirement accounts in 2019. The IRS announced Thursday that under the annual inflation-related adjustments, the agency would increase the limits of 401 (k) and IRA contributions for next year.

The ceiling for annual contributions to a traditional IRA and Roth, which has not changed since 2013, will increase from $ 5,500 to $ 6,000. The catch-up contribution to these accounts for those 50 and over remains unchanged at $ 1,000, according to the IRS. Employees who participate in the 401 (k), 403 (b) and 457 (maximum) plans, as well as the Federal Savings Plan, can set aside up to $ 19,000 before taxes, compared to $ 18,500 next year.

The option of putting an extra $ 500 each in an IRA and a 401 (k) might not seem like much. But this could save investors a lot of money in the long run. For a person who starts contributing at age 30 and retires at age 67, the additional $ 1,000 a year represents additional retirement savings of $ 134,000 with a return of 6%, according to Arielle O'Shea, Investment and Retirement Specialist at NerdWallet.

For those who can not find the extra $ 1,000 to maximize both accounts, it is important to compare the options for deciding to contribute to a 401 (k) or IRA. In general, if your employer offers a 401 (k) match with a company, try to contribute at least enough to get the maximum amount of consideration. Consider putting the rest in a Roth IRA to get more tax-free savings for retirement.

Regardless of the IRS's contributions to retirement accounts, investors should aim to increase the amount they deposit each year, said Mr. O. Shea. A retirement calculator can help you determine if you are on the right track.