IRS Announces Retirement Plan Contribution Limits for 2025
Earlier this month, the IRS announced the retirement plan contribution limit changes for 2025. The limits are adjusted annually to account for inflationary changes and other economic factors. Starting next year, there are several increases coming. This is welcome news for individuals and families that rely on employer sponsored and other retirement plans as the main retirement savings vehicle. The changes which are outlined in IRS Notice 2024-80 provide an adjusted amount for plan contribution and other limits. New this year is information on the special catch-up contribution category for those 61-63 years old. To help clients, prospects, and others, Klatzkin has provided a summary of the key information below.
2025 Adjusted Amounts
- SIMPLE Retirement Plans – The limitation amount for elective contributions will be increased from $16,000 to $16,500. The limitations for other SIMPLE Accounts will remain at $17,600. For employees 50 and over who participate in a SIMPLE plan, the catch-up contribution limit remains $3,500 for 2025. Under the new SECURE Act 2.0 provisions, the special catch-up limit for those aged between 61-63 is $5,250.
- 401(k) Plans – The annual contribution limit for those who participate in a 401(k), 403(b), 457, or Thrift Savings Plan is increased from $23,000 to $23,500. The catch-up contribution amount will remain at $2,500. Under the new SECURE Act 2.0 provisions, for participants ages 61-63 the special catch-up limit is $11,250.
- Individual Retirement Accounts – The annual contribution limit to an IRA account remains at $7,000. The special catch-up contribution limit for those aged 50 and older (amended by the SECURE Act 2.0 to include an annual cost-of-living adjustment) remains $1,000 for 2025.
- Special Distribution Amount Changes – The limit on the distribution amounts for victims of domestic abuse will increase to $10,300. The limit on a qualified long-term care distribution from a qualified plan for certified long-term care insurance applicable for distributions made after December 29, 2025, is $2,600.
- Roth IRA Income Phase-Out Range – For taxpayers making contributions to Roth IRAs, the income phase-out range has increased to between $150,000 and $165,000 for singles/head of households and between $236,000 and $246,000 for married couples filing jointly.
- Saver’s Credit Income Limit – For Saver’s Credit (Retirement Savings Contribution Credit) contributions, the income limits have been increased to $79,000 for married couples filing jointly; $59,250 for heads of household; and $39,500 for singles and married people filing separately.
Contact Us
The recently announced changes will impact the retirement savings opportunities for individuals and families. Each plan has different limits so it is important to consult with a qualified advisor to determine how you will be impacted. If you have questions about the information outlined above or need assistance with another tax or accounting issue, Klatzkin can help. For additional information call 609-890-9189 or click here to contact us. We look forward to speaking with you soon.