global Tax New Retirement Plan Contribution Limits for 2025 November 12, 2024 401k contribution limits have changed for this year. Take a look at some adjustments to the phase-out ranges and contribution limits for 2025. The Internal Revenue Service has issued their annual cost of living adjustments for 401(k) and IRAs, Pension plans, and other retirement related matters. The limits Individual Retirement Account (Roth and Traditional) Contribution Limits202520242023IRA Contribution Limit$7,000$7,000$6,500IRA Catch-up Contribution$1,000$1,000$1,000 What is the impact of these changes? "This update on 401(k) contribution limits is more than just numbers—it highlights important ways to boost retirement savings as limits increase." - Patrick Darcy Beyond the ability to save more, here’s how these changes can impact your long-term planning: Bigger Catch-Up Contributions (2025): If you’re 60 to 63, you can contribute an extra $11,250 Max Out Employer Contributions: With higher combined limits, you can take full advantage of employer matching, maximizing your tax-deferred growth. 401(k), 457 and 403(b) Contribution Limits202520242023401(k), 457 and 403(b) maximum annual elective deferral limit$23,500$23,000$22,500401(k), 457 and 401(b) catch up contribution limit for those 50 and over$7,500$7,500$7,500 SIMPLE- Savings Incentive Match Plan for Employees Contribution Limits202520242023SIMPLE employee deferrals$16,500$16,000$15,500SIMPLE catch up deferrals$3,500$3,500$3,500 Simplified Employee Pension (SEP IRA) Contribution Limits202520242023SEP annual compensation limit$350,000$345,000$330,000SEP maximum contribution$70,000$69,000$66,000 Phase-out ranges for 2025 Traditional IRA MAGI Limits202520242023Married filing jointly; a spouse who participates in an employer-sponsored plan$126,000- $146,000$123,000- $143,000$116,000- $136,000Married filing jointly; a spouse who does not participate in an employer-sponsored plan$236,000- $246,000$230,000- $240,000$218,000- $228,000Single or Head of Household$79,000- $89,000$77,000- $87,000$73,000- $83,000 For Roth IRAs, if your MAGI falls within the applicable range, you can make a partial contribution, but if it exceeds the top of the range, you are not allowed to make a contribution. Roth IRA MAGI Limits202520242023Married filing jointly$236,000- $246,000$230,000- $240,000$218,000- $228,000Single or Head of Household$150,000- $165,000$146,000- $161,000$138,000- $153,000 What is the social security wage base for 2025? Check out our blog, SSA Announces Social Security Wage Base and Benefit Changes for 2025. 202520242023Social Security Wage Base$176,100$168,600$160,020 Bear in mind that it’s crucial to stay within the IRS limits—exceeding them can lead to penalties, including a 10% fine and taxes on excess contributions. Individuals with multiple 401(k) plans, perhaps due to job changes, should be especially cautious to avoid inadvertently surpassing the annual limits. Interested in learning more about tax-advantaged retirement saving strategies?
