Insight

How much can you contribute to your retirement plan in 2025? The IRS just revealed the answer

How much can you contribute to your retirement plan in 2025? The IRS just revealed the answer | tax accountant in alexandria va | Weyrich, Cronin & Sorra

The IRS has issued its 2025 inflation-adjusted contribution amounts for retirement plans in Notice 2024-80. Many retirement-plan-related limits will increase for 2025 — but less than in prior years. Thus, depending on the type of plan you have, you may have limited opportunities to increase your retirement savings.

Type of limitation2024 limit2025 limit
Elective deferrals to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans$23,000$23,500
Annual benefit limit for defined benefit plans$275,000$280,000
Contributions to defined contribution plans$69,000$70,000
Contributions to SIMPLEs$16,000$16,500
Contributions to traditional and Roth IRAs$7,000$7,000
Catch-up contributions to 401(k), 403(b) and 457 plans for those age 50 or older$7,500$7,500
Catch-up contributions to 401(k), 403(b) and 457 plans for those age 60, 61, 62 or 63*N/A$11,250
Catch-up contributions to SIMPLE plans for those age 50 or older$3,500$3,500
Catch-up contributions to SIMPLE plans for those age 60, 61, 62 or 63*N/A$5,250
Catch-up contributions to IRAs for those age 50 or older$1,000$1,000
Compensation for benefit purposes for qualified plans and SEPs$345,000$350,000
Minimum compensation for SEP coverage$750$750
Highly compensated employee threshold$155,000$160,000

* A change that takes effect in 2025 under SECURE 2.0

Your MAGI may reduce or even eliminate your ability to take advantage of IRAs. Fortunately, IRA-related MAGI phaseout range limits all will increase for 2025:

Traditional IRAs. MAGI phaseout ranges apply to the deductibility of contributions if a taxpayer (or his or her spouse) participates in an employer-sponsored retirement plan:

  • For married taxpayers filing jointly, the phaseout range is specific to each spouse based on whether he or she is a participant in an employer-sponsored plan:
    • For a spouse who participates, the 2025 phaseout range limits will increase by $3,000, to $126,000–$146,000.
    • For a spouse who doesn’t participate, the 2025 phaseout range limits will increase by $6,000, to $236,000–$246,000.
  • For single and head-of-household taxpayers participating in an employer-sponsored plan, the 2025 phaseout range limits will increase by $2,000, to $79,000–$89,000.

Taxpayers with MAGIs in the applicable range can deduct a partial contribution; those with MAGIs exceeding the applicable range can’t deduct any IRA contribution.

But a taxpayer whose deduction is reduced or eliminated can make nondeductible traditional IRA contributions. The $7,000 contribution limit for 2025 (plus $1,000 catch-up, if applicable, and reduced by any Roth IRA contributions) still applies. Nondeductible traditional IRA contributions may also be beneficial if your MAGI is too high for you to contribute (or fully contribute) to a Roth IRA.

Roth IRAs. Whether you participate in an employer-sponsored plan doesn’t affect your ability to contribute to a Roth IRA, but MAGI limits may reduce or eliminate your ability to contribute:

  • For married taxpayers filing jointly, the 2025 phaseout range limits will increase by $6,000, to $236,000–$246,000.
  • For single and head-of-household taxpayers, the 2025 phaseout range limits will increase by $4,000, to $150,000–$165,000.

You can make a partial contribution if your MAGI falls within the applicable range, but no contribution if it exceeds the top of the range.

(Note: Married taxpayers filing separately are subject to much lower phaseout ranges for traditional and Roth IRAs.)

Revisit your retirement plan

To better ensure that your retirement plans remain on track, consider these 2025 inflation-adjusted contribution limits. We can help you review your plans and make any necessary modifications.

© 2024

Related Insights

Maximize your year-end giving with gifts that offer tax benefits | accountant in harford county md | weyrich, cronin and sorra

Tax Prep, Planning & Strategy

Maximize your year-end giving with gifts that offer tax benefits

As the end of the year approaches, many people start to think about their finances and tax strategies. One effective way to reduce potential…
Navigating tax complexities: Craft partnership agreements and LLC operating agreements with precision | Business consulting services in washington dc | Weyrich, Cronin & Sorra

Tax Prep, Planning & Strategy

Navigating tax complexities: Craft partnership agreements and LLC operating agreements with precision

Partnerships are often used for business and investment activities. So are multi-member LLCs that are treated as partnerships for tax purposes.…
Businesses can still cut their 2024 taxes | cpa in washington dc | Weyrich, Cronin & Sorra

Tax Prep, Planning & Strategy

Businesses can still cut their 2024 taxes

President-Elect Trump will take power early next year along with a unified GOP Congress. However, it’s still unknown how the tax landscape…

Connect with us

Use the form below to send us an email. WCS responds directly to all inquiries and general questions within 24 hours of posting.

This contact form is deactivated because you refused to accept Google reCaptcha service which is necessary to validate any messages sent by the form.