The IRS has announced new retirement contribution limits for 2025, offering taxpayers expanded opportunities to save for the future. These changes reflect cost-of-living adjustments and new provisions under the SECURE 2.0 Act, aimed at helping individuals maximize their retirement savings.
Here’s a breakdown of the new limits and adjustments.
Updated Contribution Limits for 2025
401(k), 403(b), 457 Plans, and Thrift Savings Plans
- Standard Contribution Limit: Increased to $23,500 (up from $23,000 in 2024).
- Catch-Up Contributions for Age 50+: Remains at $7,500, allowing total contributions of up to $31,000 for eligible participants.
- Higher Catch-Up Contributions for Ages 60-63: Increased to $11,250 under the SECURE 2.0 Act, giving older workers a final push toward retirement savings.
Individual Retirement Accounts (IRAs)
- Contribution Limit: Remains $7,000 for 2025.
- Catch-Up Contributions for Age 50+: Stays at $1,000 but will be adjusted for inflation in future years under SECURE 2.0.
SIMPLE Retirement Accounts
- Standard Contribution Limit: Increased to $16,500 (up from $16,000).
- Higher SIMPLE Contributions: Remains at $17,600 for eligible accounts.
- Catch-Up Contributions for Age 50+: Holds steady at $3,500.
- Higher Catch-Up for Ages 60-63: Increased to $5,250, offering more flexibility for late-stage savers.
Income Limits for IRA and Roth IRA Contributions
The income ranges for determining IRA deduction eligibility and Roth IRA contributions have increased for 2025.
Traditional IRA Deduction Phase-Outs
- Single Taxpayers: $79,000–$89,000 (up from $77,000–$87,000).
- Married Filing Jointly (Covered Spouse): $126,000–$146,000 (up from $123,000–$143,000).
- Married Filing Jointly (Non-Covered Spouse): $236,000–$246,000 (up from $230,000–$240,000).
- Married Filing Separately: $0–$10,000 (unchanged).
Roth IRA Contribution Phase-Outs
- Singles/Heads of Household: $150,000–$165,000 (up from $146,000–$161,000).
- Married Filing Jointly: $236,000–$246,000 (up from $230,000–$240,000).
- Married Filing Separately: $0–$10,000 (unchanged).
Updates to the Saver’s Credit
The income limits for the Saver’s Credit, which incentivizes low- and moderate-income workers to save for retirement, have also increased:
- Married Filing Jointly: Up to $79,000 (from $76,500).
- Heads of Household: Up to $59,250 (from $57,375).
- Singles/Married Filing Separately: Up to $39,500 (from $38,250).
Why These Changes Matter
These increases give individuals and families more opportunities to save for the future. Whether you’re working toward maxing out contributions, taking advantage of catch-up limits, or adjusting your retirement strategy based on new income thresholds, these updates can make a big difference in your long-term savings.
For those nearing retirement, the higher catch-up contribution limits offer additional time to strengthen your financial foundation.
What’s Next?
Now is the time to plan for these changes. Review your current contributions, consult your financial advisor, and consider adjusting your strategy to take full advantage of these updates.
For complete details, including technical guidance, check out IRS Notice 2024-80, available on IRS.gov.
Start saving smarter for a brighter retirement in 2025!
