IRS announces 2025 retirement contribution limits and adjustments
The IRS has released updated retirement contribution limits for 2025, covering 401(k)s, IRAs, SIMPLE accounts, and other retirement plans.
These adjustments, aimed at reflecting cost-of-living changes, include increased contribution limits and updated income thresholds for various retirement accounts, making it easier for Americans to save for the future.
The changes, outlined in IRS Notice 2024-80, take effect on January 1, 2025.
2025 contribution limits for 401(k) and IRA plans
Increased 401(k) contribution limit
Starting in 2025, individuals can contribute up to $23,500 to their 401(k) plans, an increase from $23,000 in 2024.
This adjustment also applies to:
- 403(b) plans
- Governmental 457 plans
- Federal Thrift Savings Plan
IRA contribution limits remain unchanged
The annual contribution limit for IRAs remains at $7,000 for 2025.
However, the SECURE 2.0 Act allows for annual cost-of-living adjustments to the IRA catch-up contribution limit for individuals aged 50 and over, which remains at $1,000 for 2025.
Also read – Maximizing your retirement contributions
2025 catch-up contributions for 401(k) and other retirement plans
Standard catch-up contributions
Employees aged 50 and older participating in 401(k), 403(b), governmental 457 plans, and the federal Thrift Savings Plan can make an additional $7,500 in catch-up contributions, allowing for a total contribution limit of $31,000 in 2025.
Enhanced catch-up contributions for ages 60–63
Under SECURE 2.0, participants aged 60–63 have a higher catch-up contribution limit. For 2025, this amount is set at $11,250 – an increase from the standard catch-up limit – providing greater saving opportunities for individuals nearing retirement.
Updated income phase-out ranges for traditional and Roth IRAs
Income limits for determining eligibility to make deductible contributions to IRAs and Roth IRAs have increased for 2025, helping more taxpayers benefit from these retirement savings accounts.
Traditional IRA phase-out ranges
- Single taxpayers with a workplace retirement plan: Phase-out range increased to $79,000–$89,000 (up from $77,000–$87,000).
- Married couples filing jointly (contributing spouse covered by a workplace plan): Phase-out range increased to $126,000–$146,000 (up from $123,000–$143,000).
- IRA contributor not covered by a workplace plan, married to a covered spouse: Phase-out range increased to $236,000–$246,000 (up from $230,000–$240,000).
- Married individual filing separately with a workplace plan: Range remains at $0–$10,000.
Roth IRA income phase-out ranges
- Singles and heads of household: Income phase-out range increased to $150,000–$165,000 (up from $146,000–$161,000).
- Married couples filing jointly: Range increased to $236,000–$246,000 (up from $230,000–$240,000).
- Married individual filing separately: Range remains $0–$10,000.
Adjustments for the Saver’s Credit income thresholds
The Saver’s Credit, designed to encourage low- and moderate-income workers to save for retirement, has updated income limits for 2025:
- Married couples filing jointly: Increased to $79,000 (up from $76,500).
- Heads of household: Increased to $59,250 (up from $57,375).
- Single and married individuals filing separately: Increased to $39,500 (up from $38,250).
SIMPLE plan contribution and catch-up limits
Contribution limit increase
The contribution limit for SIMPLE retirement accounts increases to $16,500 (up from $16,000) in 2025.
For eligible SIMPLE accounts under the SECURE 2.0 provision, the higher contribution limit remains at $17,600.
Catch-up contributions for SIMPLE plans
For employees aged 50 and over, the standard SIMPLE plan catch-up contribution limit remains at $3,500.
However, for certain SIMPLE plans under SECURE 2.0, a different limit applies, which remains $3,850 for 2025.
Additionally, those aged 60–63 can contribute up to $5,250 as a catch-up contribution in applicable SIMPLE plans.
Defined benefit and contribution plan limits
Defined benefit plans
The annual benefit limit under defined benefit plans rises to $280,000 for 2025, up from $275,000 in 2024.
Defined contribution plans
For defined contribution plans, the 2025 limit is now $70,000, increased from $69,000.
Additional cost-of-living adjustments for retirement-related provisions
Several other key retirement plan thresholds and compensation limits are also updated for 2025:
- Elective deferral limit (for 401(k), 403(b), and 457 plans): Increased to $23,500.
- Compensation threshold for “highly compensated employees”: Increased to $160,000 (up from $155,000).
- Compensation threshold for “key employee” in top-heavy plans: Increased to $230,000 (up from $220,000).
- Annual compensation limit for qualified retirement plans: Raised to $350,000 from $345,000.
- Multiemployer plan threshold for determining systemically important plans: Increased to $1,441,000,000 from $1,369,000,000.
These adjustments ensure that retirement plan contribution limits align with inflation and provide more opportunities for Americans to save effectively for retirement.
Final thoughts
The IRS’s 2025 updates to retirement account contribution limits and cost-of-living adjustments reflect ongoing efforts to support Americans in building a secure retirement.
From higher 401(k) and SIMPLE account limits to expanded phase-out ranges for IRAs, these changes can help individuals maximize their retirement savings.