The IRS released the retirement savings plan contribution limits for 2025, raising the cap on pre-tax contributions to employer-sponsored plans, including 401(k), 403(b) and certain 457 plans. For individual retirement plan contributions, the annual limits remain unchanged.
Employer-Sponsored Retirement Plans
Employees may contribute up to $23,500 via salary deferral to their workplace 401(k), 403(b) and certain 457 plans in 2025, a $500 increase from the previous year, while those age 50 and older can save an additional $7,500, the same amount as the previous year. In addition, 2025 introduces a new super catch-up contribution of up to $11,250 for individuals aged 60 through 63 when their plans allow this benefit.
Self-employed taxpayers with solo 401(k)s may contribute up to $70,000 to those plans in 2025, 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 |
| Solo 401(k) Contribution Limit | $69,000 | $70,000 |
| SIMPLE 401(k) and Simple IRA Contribution Limit | $16,000 | $16,500 |
| Catch-Up SIMPLE IRA 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.
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.
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: Olga Ismail is the head of Retirement Plan Consulting and a financial advisor with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs and a registered representative with PWA Securities, LLC. She can be reached at the firm’s Fort Lauderdale, Fla., office at (954) 712-8888 or info@provwealth.com.
Provenance Wealth Advisors (PWA), 200 E. Las Olas Blvd., 19th Floor, Ft. Lauderdale, FL 33301 (954) 712-8888.
Olga Ismail is a registered representative of and offers securities through PWA Securities, LLC, Member FINRA/SIPC.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
Any opinions are those of the advisors of PWA and not necessarily those of PWA Securities, LLC. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of PWAS, we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Prior to making any investment decision, please consult with your financial advisor about your individual situation.
401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Investing involves risk, investors may incur a profit or loss regardless of the strategy or strategies employed. Future investment performance cannot be guaranteed. Matching contributions from your employer may be subject to a vesting schedule, please review your retirement plan documents or consult with a financial professional for more information.
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Posted on December 15, 2024