2025 IRS Updated Retirement Contribution Limits & Caps

November 8, 2024

The IRS has updated the retirement contribution limits for 2025, offering both new opportunities and considerations as you plan for the future.

Here’s a breakdown of the new limits:

1. 401(k) and Roth 401(k) Contributions

For 2025, the contribution limit for traditional 401(k) and Roth 401(k) accounts has increased:

• Under Age 50: The contribution cap has risen to $23,500, up from $23,000 in 2024.

• Age 50 and Over (Catch-Up Contributions): Those 50 and older can still make an additional catch-up contribution of $7,500, unchanged from 2024.

• New for 2025: A “super catch-up” contribution for individuals ages 60 to 63, allowing an additional $11,250 contribution. This is a part of SECURE Act 2.0, and you may need to talk to your 401(k) plan administrator and have them amend your plan to allow for this new super catch-up contribution. After age 63, individuals revert to the standard catch-up amount of $7,500.

2. SIMPLE IRA Contributions

For those with a SIMPLE IRA, contribution limits for 2025 have been adjusted as follows:

• Under Age 50: The contribution cap has increased to $16,500, up from $16,000 in 2024.
• Age 50 and Over (Catch-Up Contributions): Those 50 and older can make an additional catch-up contribution of $3,500, which is unchanged from 2024.
  
  

3. IRA and Roth IRA Contributions

For traditional and Roth IRAs, the contribution limits remain unchanged for 2025:

• Under Age 50: $7,000.
• Age 50 and Over (Catch-Up Contributions): $1,000 additional catch-up, unchanged from 2024.
  
  

While IRA contribution limits haven’t increased, these accounts continue to offer significant tax advantages and should still be a critical part of retirement planning.

4. 401(k) / Profit Sharing Plan Contributions

• 2025 Maximum: $70,000, up from $69,000 in 2024.
  
  

5. Profit-Sharing/Safe Harbor/Matching Minimum Compensation

• 2025 Minimum: $350,000, up from $345,000 in 2024.
  
  

6. Wages for Dependent Children

• 2025 Maximum: $15,000, up from $14,600 in 2024.
  
  

7. Adjusted Gross Income (AGI) Limits for Roth IRA Contributions

The AGI limits for directly contributing to a Roth IRA have also been raised for 2025. If your income exceeds this, you can still fund a Roth IRA, but you must do so via a “Backdoor Roth Conversion).

• Single Filers: The limit has increased from $161,000 in 2024 to $165,000.
• Married Filing Jointly: The limit has risen from $240,000 to $246,000.

These updated limits provide new opportunities to bolster your retirement savings. Whether you’re making catch-up contributions, leveraging new super catch-up options, or optimizing your savings strategy through profit-sharing or Roth contributions, understanding these changes can help you make informed decisions.

Talk to us today to discuss how these changes impact your retirement plan and how to take advantage of the new 2025 limits.

References

https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000

https://www.usatoday.com/story/money/2024/11/03/irs-401k-limits-2025-super-catch-up/75994341007/