If your 2019 resolutions include getting your financial house in order, then there are a few deadlines you may want to note as we head into January:
IRA / Roth IRA Accounts – The deadline for contributing to IRA and Roth IRA accounts is the tax filing date each year. This means the deadline for making a 2018 contribution to one of these accounts is April 15, 2019. Taxpayers may contribute a total of $5,500 to IRA and Roth accounts in the 2018 tax year (with an additional $1,000 available to taxpayers aged 50 and over).
401(k)/Employer-sponsored Retirement Plans – Employees generally make contributions to employer-sponsored retirement plans on a calendar-year basis, and are limited in 2018 to contributions of up to $18,500 (with an additional $6,000 in catch-up contribution available for employees aged 50 and over). Employers, however, generally have until their tax filing deadlines to make contributions on behalf of their employees. This is why some companies make discretionary contributions in the spring each year for profit sharing, employee-match catch-ups, etc. Things get confusing when the employee is also the employer, as self-employed individuals can usually make these contributions up until their tax filing date.
529 College Savings Plans – Contribution rules for these plans vary by state. In Oregon, for example, taxpayers must have the 529 account open prior to December 31, 2018, but may then contribute up until the time they file their state tax return in April, 2019. Oregonians may deduct contributions of up to $2,375 ($4,750 if filing jointly) on their state income tax returns — and they can carry forward these deductions to future years — so accounting for the timing of contributions can be important.
Health Savings Accounts – Contributions to health savings accounts (HSAs) must be made by April 15, 2019 in order to qualify as 2018 contributions. These contributions are limited to $3,450 per person ($6,900 for a family) and allow for a $1,000 catch-up contribution for taxpayers aged 55 and over (note: The catch-up age is different than with IRA/401(k) accounts). HSAs allow taxpayers to carry-forward excess contributions in order to deduct them in future tax years, so the timing of these contributions can be tricky.
Contributions to each of these accounts may be subject to a number of income phase-out rules and other plan-specific regulations. You should discuss these contributions with your CPA prior to taking any action. The Arnerich Massena team discusses these contributions with all of our clients and their tax advisors. We’re happy to help if you have any questions.