The SEP IRA Limit Is Increasing in 2019

For those with money to spare the SEP IRA contribution limit is increasing by $1000 in 2019 from $55000 to $56000.

SEP IRAs are traditional retirement accounts for small business owners and employees including self-employed freelancers. Contributions are tax-deductible and as with a traditional IRA your investments grow tax-deferred until you withdraw the funds at which point they’re taxed as income.

With SEP IRAs the employer makes the contributions which cannot exceed the lesser of:

That’s what makes them so appealing to freelancers: If you can swing it you can save and invest significantly more than you can with a traditional IRA which can give you an edge in retirement (not to mention it’s simpler—hence the name—to set up an SEP).

Down sides: There are no catch-up contributions for people over 50 and if you work for a small employer you’re reliant on them to make contributions for you.

The contribution limit for solo 401(k)s which can only be opened by business owners with no employees was also boosted by $1000 to $56000 for 2019. These accounts also allow $6000 in catch-up contributions for business owners over 50 (the math of course is more complicated than that).

401(k) and regular IRA/Roth savers are also able to save a bit more in 2019 to keep pace with inflation.