The Internal Revenue Service (IRS) has announced new contribution limits for 401(k) plans and other retirement accounts for the year 2025. The employee deferral limit for 401(k)s, 403(b)s, governmental 457 plans, and the federal government’s Thrift Savings Plan will increase to $23,500, up from $23,000 in 2024. The catch-up contribution limit for participants aged 50 and older remains at $7,500, allowing them to contribute a total of $31,000 in 2025.
Starting in 2025, a new tier for catch-up contributions will be introduced for employees aged 60 to 63, with a higher limit of $11,250. “Employers’ retirement plans must be amended to specifically allow for this super catch-up contribution,” said certified public accountant Richard Pon from San Francisco, California. The IRS also announced updates to IRA limits.
The annual contribution limit for IRAs remains at $7,000 for 2025, with the catch-up contribution limit for individuals aged 50 and up staying at $1,000.
Irs announces new retirement limits
Income phase-out ranges for deductible contributions to traditional IRAs, Roth IRA contributions, and the Saver’s Credit have all increased for 2025.
The new phase-out ranges for single taxpayers covered by a workplace retirement plan are $79,000 to $89,000, while for married couples filing jointly, the range is $126,000 to $146,000 if the contributing spouse is covered by a workplace plan. For IRA contributors not covered by a workplace plan but married to someone who is, the range is $236,000 to $246,000. Roth IRA contribution phase-out ranges have also been adjusted.
For singles and heads of household, the range is $150,000 to $165,000, and for married couples filing jointly, it is $236,000 to $246,000. The range for married individuals filing separately remains unchanged at $0 to $10,000. The Saver’s Credit 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 individuals filing separately.
These adjustments reflect the IRS’s efforts to keep up with inflation and provide greater opportunities for Americans to save for retirement.
