WASHINGTON, D.C. — The Internal Revenue Service (IRS) has announced an increase in the contribution limits for various retirement savings plans for the year 2025, marking a continued effort to enhance retirement savings opportunities for individuals. This adjustment reflects the annual cost-of-living changes and includes significant updates under the SECURE 2.0 Act of 2022.
The maximum amount individuals can contribute to their 401(k) plans will rise to $23,500, a $500 increase from the previous limit. This adjustment also applies to 403(b), governmental 457 plans, and the federal Thrift Savings Plan, allowing participants to enhance their retirement savings.
The limit for annual contributions to Individual Retirement Arrangements (IRAs) remains steady at $7,000. However, the catch-up contribution limit for individuals aged 50 and over, now subject to a cost-of-living adjustment under the SECURE 2.0 Act, remains at $1,000 for 2025.
For those aged over 50 participating in most 401(k), 403(b), and similar plans, the catch-up contribution limit continues at $7,500. Consequently, eligible participants can contribute a total of up to $31,000 annually. A notable update under the SECURE 2.0 Act provides a higher catch-up contribution limit of $11,250 for employees aged 60 to 63, offering an additional savings boost during these crucial pre-retirement years.
The IRS has also adjusted the income ranges that determine eligibility for making deductible contributions to traditional IRAs and contributing to Roth IRAs. For single filers covered by a workplace retirement plan, the phase-out range has increased to $79,000 to $89,000. For married couples filing jointly, if the spouse making the contribution is covered by a workplace retirement plan, the phase-out range is now $126,000 to $146,000. These adjustments aim to allow more taxpayers to benefit from retirement savings deductions.
The income phase-out range for Roth IRA contributions has been raised to $150,000 to $165,000 for singles and heads of households, and $236,000 to $246,000 for married couples filing jointly. These changes reflect ongoing efforts to expand access to retirement savings options for a broader segment of the population.
The Saver’s Credit, designed to incentivize low- and moderate-income workers to save for retirement, has seen an increase in its income limit. The threshold for married couples filing jointly is now $79,000, while it is $59,250 for heads of households and $39,500 for singles and married individuals filing separately.
Moreover, contributions to SIMPLE retirement accounts have increased to $16,500, with the SECURE 2.0 Act allowing for a higher contribution amount of $17,600 for certain applicable SIMPLE accounts. The catch-up contribution limit for those over 50 remains $3,500, with a specific increase to $5,250 for participants aged 60 to 63 in certain SIMPLE plans.
Information regarding these and other cost-of-living adjustments related to retirement for 2025 can be found in Notice 2024-80, which is available on IRS.gov.
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