Government Says You Can Stash Away More for Retirement in 2018

You can put more money into several — but not all — types of retirement accounts next year. Here's who will be affected, and how much more they can contribute.

Government Says You Can Stash Away More for Retirement in 2018 Photo by Myvisuals /

Folks with workplace retirement plans will be able to save more money in their accounts next year.

The Internal Revenue Service Thursday that the contribution limit for the following types of workplace retirement plans will increase by $500 for tax year 2018:

  • 401(k)
  • 403(b)
  • Most 457 plans
  • Thrift Savings Plan

So, if you’re an employee with one of those account types and you are 49 years old or younger, you’ll be able to put as much as $18,500 in the account next year.

This increase from $18,000 for tax year 2017 is known as a cost-of-living adjustment, or COLA. Under federal law, the U.S. Department of the Treasury — which includes the IRS — must evaluate annually whether to make such adjustments to retirement plan contribution limits. A rising cost of living typically results in higher contribution limits.

Employees with one of the aforementioned account types who are 50 or older can contribute an additional $6,000, known as a “catch-up contribution.” In other words, they can contribute a total of up to $24,500 next year.

That catch-up contribution limit remains the same as it was for 2017. It is not receiving a COLA for 2018.

No increases for IRAs

Contribution limits for individual retirement accounts, or IRAs, will not receive COLAs, either. For both traditional IRAs and Roth IRAs, contribution limits will remain where they were set in 2015:

  • $5,500 for people age 49 and younger
  • $6,500 for people age 50 and older (which reflects the same catch-up contribution limit of $1,000)

To learn more about the different types of retirement plans, check out “Confused by Retirement Accounts? Roth, Regular IRAs and 401(k)s Made Simple.”

To learn about the COLAs that the federal government has set for Social Security benefits, check out “2018 Social Security Bump Is Biggest in 6 Years for Retirees.”

How do you feel about the retirement plan contribution limits for 2018? Sound off below or .

Karla Bowsher
Karla Bowsher
I’m a freelance journalist and former newspaper reporter who has covered both personal and public finance. I've worked for a top 50 major metro daily and a community newspaper as well as ... More


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