IRS Sets Retirement Savings Contribution Limits for 2025 by Tony Gutierrez, CPA
Taxpayers can contribute more pre-tax dollars to their employer-sponsored retirement savings plans in 2025, but their contributions to Individual Retirement Accounts (IRAs) remain unchanged from the previous year.
Employer-Sponsored Retirement Plans
In 2025, employees may contribute up to $23,500 to a workplace 401(k), 403(b) and certain 457 plan, a $500 increase from the previous year. Plan participants ages 50 and older may continue to make an additional catch-up contribution of $7,500 to their plans, while those between the ages of 60 and 63 may, for the first time, make a super catch-up contribution of $11,250 when their plans allow. Employees have until the last day of the calendar year to contribute to their workplace retirement plans via salary deferral.
For self-employed taxpayers with solo 401(k)s, the maximum amount they may contribute to those plans in 2025 is $70,000, up from $69,000 in the prior year. This limit includes taxpayers’ elective salary deferrals and the profit-sharing contributions made by their businesses. Contributions to SIMPLE retirement accounts (also known as SIMPLE IRAs) also increase $500 in 2025 to $16,500. Business owners with Schedule C income must complete employee contributions and employer matches to their workplace plans by the April 2026 tax filing deadline.
| |
2024 Limit |
2025 Limit |
| 401(k), 403(b) or 457 Employee Contribution Limit |
$23,000 |
$23,500 |
| Catch-Up 401(k), 403(b) or 457 Contribution Limit |
$7,500 |
$7,500 |
| Catch-Up Contribution Limit for Ages 60, 61, 62 & 63 |
$0 |
$11,250 |
| Defined Contribution Plan and SEP Contribution Limit |
$69,000 |
$70,000 |
| SIMPLE 401(k) and Simple IRA Contribution Limit |
$16,000 |
$16,500 |
| Catch-Up SIMPLE 401(k) and Simple IRA Contribution Limit |
$3,500 |
$3,500 |
The maximum compensation that may be considered for benefit calculations and nondiscrimination testing in 2025 increases to $350,000, up from $345,000 in 2024. In addition, the definition of highly compensated employees (HCEs) for determining how much HCEs can contribute to their employers’ 401(k) plans increases in 2025 to $160,000, up from $155,00 in 2024.
Individual Retirement Accounts
The maximum amount individuals may contribute to their traditional IRAs and Roth IRAs in 2025 remains at $7,000. Catch-up contributions for individuals ages 50 and older also remain unchanged from the previous year at $1,000.
Traditional IRA contributions may be deductible when a workplace retirement plan covers taxpayers or their spouses. However, the deduction may be reduced or phased out entirely based on the taxpayer’s income and filing status.
- For single taxpayers covered by a workplace retirement plan, the income phase-out range increases in 2025 to between $79,000 and $89,000, up from $77,000 to $87,000.
- For married couples filing joint tax returns, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range increases to between $126,000 and $146,000, up from $123,000 and $143,000.
- For IRA contributors not covered by workplace retirement plans and are married to someone covered, the income phase-out range increases to between $236,000 and $246,000, up from $230,000 to $240,000.
- For married individuals filing separate returns covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The IRS also increases the maximum income limits individuals must meet to be eligible to contribute to a Roth IRA in 2024, based on their income and filing status.
- Singles and heads of household who earn up to $165,000 in 2025 may contribute to a Roth IRA, although the maximum contribution will begin to phase out when income reaches $150,000.
- For married couples filing joint tax returns, the phase-out range increases to between $236,000 and $246,000, a $6,000 increase from the previous year.
If a taxpayer earns too much income to contribute to a Roth IRA in 2025, they may instead contribute to a traditional IRA and later convert that account to a Roth for the benefit of tax-free distributions in retirement (provided they own the Roth IRA for a minimum of five years).
| |
2024 Limit |
2025 Limit |
| Maximum Traditional IRA and Roth IRA Contribution |
$7,000 |
$7,000 |
| Catch-Up IRA Contribution |
$1,000 |
$1,000 |
The deadline for making annual contributions to traditional IRAs or Roth IRAs is April 15 of the year following their contribution. This additional time allows individuals to assess their tax liabilities at the end of the year and determine whether it is more beneficial to claim the deduction for that year by contributing to a traditional IRA or paying taxes now on contributions to a Roth IRA, for which future withdrawals in retirement will be tax-free.
About the Author: Tony Gutierrez, CPA, is a director of Tax Services with Berkowitz Pollack Brant Advisors + CPAs, where he focuses on tax and estate planning for high-net-worth individuals, family offices, and closely held businesses in the U.S. and abroad. He can be reached at the CPA firm’s Miami office at (305) 379-7000 or info@bpbcpa.com.
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