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Self Directed IRA Articles

Contribution Limits and Deadlines for Opening and Funding Retirement Plans

Posted by Jack Callahan on Nov 10, 2018 10:13:02 AM

This year is almost over, and we want to know: have you maxed out the contribution limits in your retirement plans for 2018? Have you opened a new retirement account that best meets your needs? To do either (or both!) there are some contribution limits and retirement plan deadlines you need to know. This information will help you end 2018 on a strong note so you can get a running start with your retirement plan goals in the new year.

Below is a list of retirement accounts, including opening deadlines and contribution limits for each as set forth by the IRS.Blog_hourglass_coins_shutterstock_431122000

Traditional and Roth IRAs

  • These IRAs must be opened and funded by April 15 of the following year in order to count on current year’s tax return.
  • The annual contribution limit for both plans is $5500 (or $6500 if you’re 50 years of age or older, thanks to the catch-up contribution provision).

 SIMPLE IRAs 

  • The deadline to open a SIMPLE IRA is October 1 in the current year. You’ve missed that date for 2018, but to establish a SIMPLE IRA next year, you must do so by October 1, 2019.
  • Employee contributions must be deferred from your compensation and contributed to the IRA by December 31.
  • Employer contributions must be made by the date of filing your return. If you filed an extension, the employer portion can be extended, as well, but must be made before the date you file your return.
  • Employee contribution limits are $12,500 or $15,500 if you’re 50 or older.
  • The Employer contributions are limited to between 1-3% of an employee’s annual compensation.

SEP IRAs

  • You must open and/or contribute to a SEP IRA before you file your tax return.
  • If you file an extension, you gain even more time to open and fund the account, provided that this occurs before the due date of your tax return. For example, for a 2018 SEP contribution, you would have potentially until October 15, 2019 (which is the deadline for all extensions) to open the SEP and make the contributions.
  • Contributions cannot exceed 25% of your compensation or $55,000 (whichever amount is less).

Individual 401(k) Plans

  • Individual or solo 401(k) plans must be established by December 31. Employee contributions (salary deferrals) should be withheld and contributed to the plan no later than January 31st of the following year.
  • Employer contributions (profit-sharing matches) are due by the date you file your return, which includes any extensions.
  • The annual contribution limit for salary deferrals is $18,500, but if you’re 50 or older that total rises to $24,500.
  • If your plan involves a profit-sharing match, you as the employer, can contribute up to 25% of your compensation or 25% of your income if you’re self-employed.
  • Your total contributions (salary deferral plus profit sharing match) cap out at a limit of $55,000, or $61,000 if you’ve reached the age of 50 or older.

All of the accounts mentioned in this article can be self-directed.

So, if you’re interested in learning how you can control your own retirement funds and choose your own investments, you can view these plans in detail by visiting the Self-Directed Plans page on AdvantaIRA.com.

Of special note: Understanding the contribution limits of your retirement plan is just as important as choosing the right plan for you. The information provided above is meant to be a guideline for you, but you should always consult your tax or financial advisor to ensure your transactions are in compliance with IRS rules and regulations.

If you have questions about this article or wish to learn more about self-directed IRAs, please contact Advanta IRA by calling (800) 425-0653. We are happy to answer questions you may have pertaining to self-directed accounts and the rules that govern them.

 

This article was published on January 4, 2017 but has been updated with current information regarding 2018 contribution limits and other deadlines.

Topics: Contributions & Distributions, SIMPLE IRA, SEP IRA, Traditional IRA, Roth IRAs