2025 401(k) and IRA Contribution Limits

2025 401(k) and IRA Contribution Limits

Key Points – 2025 401(k) and IRA Contribution Limits

• Contribution Limits for 401(k)s, 403(b)s, Eligible 457s, and Thrift Savings Plans Increase to $23,500 for 2025
• IRA and Roth IRA Contribution Limits Remain at $7,000
• How SECURE 2.0 Will Impact Catch-up Contributions Starting in 2025
• Remembering That Contribution Limits Are Tied to Inflation
• 4-Minute Read

401(k), 403(b), Eligible 457s, and Thrift Savings Plan Contribution Limits Are Going Up Again in 2025

On November 1, the IRS announced 401(k) and IRA contribution limits for 2025.₁ For the second straight year, the contribution limits for 401(k)s, 403(b)s, eligible 457s, and Thrift Savings plans increased by $500 from $23,000 to $23,500. From 2022 to 2023, there was a $2,000 increase for those workplace retirement plans. So, why was the increase so much larger for 2023 than it was for 2024 or 2025? Let’s dive into it and why it’s important to maximize your contributions.

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Inflation Keeps Cooling

Retirement plan contribution limits correlate with inflation. Inflation peaked at 9.1% in June 2022, but it has cooled to 2.4%—the lowest mark since February 2021. Look at Figure 1 to see how inflation has cooled over the past two years.

FIGURE 1 – U.S. Inflation Month by Month – U.S. Bureau of Labor Statistics/U.S. Inflation Calculator₂

SECURE 2.0 Provision Impacts Catch-up Contributions

Are you 50 or older? If so, you have an opportunity to contribute more than $23,500 to your workplace retirement plan by making a catch-up contribution. For 2025, the full catch-up contribution limit is $7,500 for most individuals who are 50-plus, which is the same amount as 2024. A maximum contribution with a full catch-up is $31,000 for 2025.

However, there is a new opportunity beginning in 2025 to make higher catch-up contributions if you’re 60, 61, 62, or 63 due to a change in the SECURE Act 2.0. The higher catch-up contribution limit for these eligible individuals is $11,250 for 2025.

FIGURE 2 – Maxing Out 401(k) Contributions with Catch-up

2025 Traditional and Roth IRA Contribution Limits

While the contribution limits to workplace retirement plans are increasing by $500, IRAs and Roth IRA contributions limits will remain at $7,000 for 2025. Keep in mind that the $7,000 contribution limit is for IRAs and Roth IRAs combined. You can’t make a $7,000 contribution to an IRA and then make another $7,000 contribution to a Roth IRA in the same year. Individuals who are 50 and older can make a $1,000 catch-up contribution to push their maximum IRA/Roth IRA contribution to $8,000 for 2025.

2025 Roth IRA Income Limits

If you plan to contribute to a Roth IRA, remember that there are income limits to abide by. These income limits are based on Modified Gross Adjusted Income.

If you’re married and filing jointly in 2025, your MAGI must be lower than $236,000 to make a full Roth IRA contribution. You’ll still be eligible for a partial contribution if your MAGI is under $246,000. The phase-out range is $230,000-$240,000 for 2024, so there will be a $6,000 increase for 2025.

If you’re a single filer or a head of household, the phase-out range will increase to $150,000-$165,000 to contribute to a Roth IRA in 2025. This is up from $146,000-$161,000 in 2024.

2025 Traditional IRA Deduction Limits

For IRA contributions, there are deduction limits that you need to keep in mind. IRA deduction limits vary depending on if you and your spouse have workplace retirement plans.

If you are married and filing jointly and you and your spouse both have workplace retirement plans, the spouse making the IRA contribution must have less than $126,000 to make a full contribution and $146,000 to make a partial contribution in 2025. The phase-out range in 2024 is $123,000-$143,000.

Now, let’s say you’re married filling jointly and want to contribute to an IRA, but don’t have a workplace retirement plan. If your spouse has a workplace retirement plan, you’ll still be eligible to make a full IRA contribution if your income is lower than $236,000 in 2025. The phase-out range will be $236,000-$246,000, which is up from $230,000-$240,000 in 2025.

If you’re a single filer and have a workplace retirement plan, the phase-out range has increased to $79,000-$89,000 for 2025. That’s up from $77,000-$87,000 in 2024. If you’re a single filer and don’t have a workplace retirement, no income limits apply.

FIGURE 3 – Comparing 2024 and 2025 Traditional IRA Deduction Limits

2025 IRA Contribution Limits for Small Business Owners and Self-Employed Individuals

We also want to review 2025 contribution limits for all the small business owners and self-employed individuals out there. Individuals with SIMPLE retirement accounts will be eligible to contribute up to $16,500 in 2025, which is a $500 increase from 2024. There are certain SIMPLE retirement accounts that allow for a $17,600 maximum contribution following a SECURE 2.0 provision in 2025, so make sure to clarify if that applies to you.

For those of you who have a maximum SIMPLE retirement account contribution of $16,500 in 2025, you’ll be eligible for a $3,500 catch-up contribution. If you’re eligible for a $17,600 maximum contribution in 2025, your catch-up contribution limit will be $3,850.

There is also a higher SIMPLE retirement account catch-up contribution of $5,250 for individuals who are 60-63 starting in 2025. This increase was also implemented as a part of SECURE 2.0.

Are You Planning to Claim the Saver’s Credit?

The IRS also increased the income limit for claiming the Saver’s Credit for 2025. If you’re married and filing jointly, the income limit will be $79,000 in 2025, which is up from $76,500 in 2024. For heads of household, it will be $59,250 in 2025 (up from $57,375 in 2024). And for single filers, it will be $39,500 in 2025 (up from $38,250 in 2024).

Do You Have Questions About the 2025 401(k) and IRA Contribution Limits?

Maximizing retirement plan contributions has been a hot topic on America’s Wealth Management Show. 401(k) savings are on the rise! The IRS is giving you an opportunity to increase your savings in 2025, so make sure to take note of the contribution limit increases. If you have any questions about how much you can contribute to your workplace retirement plan and IRAs/Roth IRAs in 2025, start a conversation with our team below.

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It’s our goal to not only help people save enough to get to retirement, but THROUGH retirement. We can’t tell you how much you need to save for retirement without knowing your goals. That’s why our team of professionals works together on behalf of our clients to build and continuously review their individualized financial plans. Let’s get started on defining your financial future.

2025 Tax Brackets & Contribution Limits | Watch Guide

00:00 – Understanding the Rules
02:58 – 2025 Standard Deductions
04:24 – 2024 Tax Brackets
05:21 – 2025 Tax Brackets
08:02 – 2025 Tax Bracket Married Filing Joint Example
13:13 – 2025 Contribution Limits
15:16 – Something Good! New Catch Up Limits for Ages 60-63
17:31 – Let’s Talk About Roth Again

Resources Mentioned in This Article

• 2024 401(k) and IRA Contribution Limits
• 10 Ways to Fight Inflation in Retirement
• Is Inflation Still Cooling?
• Catch-up Contributions for Your Retirement Plan
• Understanding the SECURE Act 2.0 with Ed Slott, CPA
• Retirement Planning for Self-Employed Individuals and Small Business Owners
• 401(k) Savings Are on the Rise
• Should I Max Out My 401(k)?
• Setting Retirement Savings Goals
• Why You Need a Financial Planning Team with Jason Gordo
• Components of a Complete Financial Plan with Logan DeGraeve, CFP®, AIF®
• Short-Term, Mid-Term, and Long-Term Financial Goals

Other Sources

[1] https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000

[2] https://www.usinflationcalculator.com/inflation/current-inflation-rates/