If your company offers IRA or 401(k) plans, you and your employees have likely noticed recent increases to the 2019 contribution limits thanks to a cost of living adjustment made by the Internal Revenue Service. Here is a brief summary of the changes to 401(k) plans that took effect in 2019. Contribution Limits: Employees Under 50
  1. The 401(k) employee contributions limit has been raised from $18,500 to $19,000.
  2. The total 401(k) retirement contribution limit (employee elective deferrals + employer contributions) has increased from $55,000 to $56,000.  
  3. IRA contribution limits increased $500 from $5,500 to $6,000.
Employees Over 50
  1. Employee 401(k) contribution limits rose from $24,500 to $25,000.
  2. The total 401(k) retirement contribution limit (employee elective deferrals + employer contributions) has increased to $62,000.
  3. The 401(k) Catch-Up – Unchanged: The catch-up contribution limits for employees age 50 and older who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan have not changed and remain at $1,000 for IRAs and $6,000 for workplace retirement accounts. If you don’t turn 50 until December 31, 2019, you can still make the additional $6,000 catch-up contribution for the year.
Employer Match and the Employee’s 401(k) Contribution We are frequently asked if the employer match counts toward the employee’s 401(k) maximum contribution and the answer is no. For example, an employee can contribute up to $19,000 (or up to $25,000 if they are 50 or over as outlined above) regardless of the employer’s contribution amount. Compensation Thresholds For the first time in several years, the compensation thresholds have changed for Key and Highly-Compensated Employees.  With the 2019 income limit updates, employees are now required to earn $5,000 more to be considered a Highly-Compensated (HCEs) or Key Employee. It’s important to note that this increase may trigger changes to your ADP, ACP or Top-Heavy nondiscrimination tests. SEP IRAs and Solo 401(k)s There’s good news for small business owners and other self-employed taxpayers. The amount self-employed and small business owners can save in a SEP IRA or Solo 401(k) increased from $55,000 in 2018 to $56,000 in 2019. This is based on the amount they can contribute as an employer, as a percentage of their salary; the compensation limit used in the savings calculation also increases from $275,000 in 2018 to $280,000 in 2019. Informing Employees It’s important to notify employees of these changes to annual contribution limits and explain how it impacts their financial plans. As you, your company’s human resources director and payroll managers adjust your systems and educate employees about the new contribution limits, we can help. Whether you’re looking to automate your payroll and benefits systems, explain complex options or changes to your employees, our expert advisors will provide onboarding assistance, ongoing education and support.   Considering Offering A Retirement Plan? If your company currently does not offer retirement plans to your employees, these limit increases signal an ideal time to consider adding a retirement savings program to your menu of benefits. For employees, the increases in contribution limits may lead to an increase in your employee’s savings rate and readiness for retirement. For you as the employer, HR or benefits director the addition of retirement plans can help you attract and retain quality talent while you increased current employee satisfaction, engagement and retention. Have questions? Our advisors can help when it comes to building, implementing and communicating your 401k plan benefits to your employees. Just email or call us at (561) 288-1111.
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Matching Your Risk and Return: A Personalized Approach for Maximizing Your Financial Success
At Rubin Wealth Advisors, we believe that understanding your risk tolerance is the key to maximizing your financial potential. Traditional methods of categorizing risk with vague labels like conservative, moderate, or aggressive often lead to confusion. These terms can mean entirely different things to different people, which creates misalignment between your expectations and your investment strategy. That’s where problems can arise—and where opportunities can be missed.
 
We take a different approach. By using a precise, quantitative system to determine your Risk Number, we help you make informed decisions that directly benefit you. Your Risk Number is more than just a score; it’s a powerful tool that helps guide your financial strategy. If your Risk Number is 64, for example, both you and our team will know exactly what level of risk that involves and how it relates to potential returns. The guesswork is gone, replaced by clarity and confidence.
 
Here’s where it really benefits you: Understanding your Risk Number not only ensures that your portfolio is aligned with your comfort zone, but it also increases your chances of achieving a higher risk-adjusted rate of return over time. By matching your investments to your specific risk profile, you’re better positioned to optimize returns without taking on unnecessary risk—especially over a 3-5 year period, where market fluctuations can test even the most seasoned investor.
 
The process is simple and designed to serve your best interests. In just a few minutes, we’ll walk through a short conversation to determine your Risk Number. From there, we’ll craft an investment portfolio tailored specifically to you, ensuring that the level of risk is appropriate for your goals. This isn’t about avoiding risk entirely; it’s about taking on the right amount of risk so you can achieve the returns you need while remaining confident in your strategy.
 
By aligning your portfolio with your Risk Number, you gain the peace of mind to handle market volatility. You’ll know exactly how much downside risk is possible and what kind of upside you can expect. For example, a portfolio with a Risk Number of 64 might have a potential downside of -10% over six months but offers a possible 15% gain. This range helps you stay calm during downturns because you’ve already accounted for them, and it positions you to benefit when the market performs well.
 
We also stress-test your portfolio in various market conditions—such as economic downturns or inflation spikes—to ensure you’re always prepared. This proactive approach ensures your investments stay aligned with your risk tolerance, giving you the best chance for success regardless of what happens in the markets.
 
How does this benefit you? Managing risk properly allows you to maximize returns without exposing yourself to more risk than necessary. Over time, this careful balance increases the likelihood that you’ll achieve your financial goals—whether that’s building wealth, preparing for retirement, or preserving your assets.
 
At Rubin Wealth Advisors, a Boca Raton financial advisor, we’re committed to helping you achieve higher risk-adjusted returns. As a licensed fiduciary, we specialize in guiding clients through personalized wealth management strategies, ensuring your investments align with your long-term goals. Let’s work together to discover your Risk Number and build a strategy that sets you up for success over the next 3-5 years and beyond. Contact us today to get started.