2025 Retirement Plan Updates: What You Need to Know

The IRS has unveiled significant updates to retirement plans and contribution limits for 2025. These changes aim to encourage savings and adjust for inflation – making it a great time to revisit your financial plan. Let’s explore the key updates:

401(k), 403(b), and 457 Plans

• Increased Contribution Limit: Employees can now contribute up to $23,500 annually, up from $23,000 in 2024.
• Catch-Up Contributions for Age 50+: This limit remains at $7,500, allowing employees aged 50 and older to save up to $31,000 annually.
• New SECURE 2.0 Catch-Up Rule for Ages 60–63: A special higher catch-up contribution limit of $11,250 applies for individuals in this age range for a total limit of $34,750.

IRA Contributions

• Standard Contribution Limit: The limit remains unchanged at $7,000 for 2025.
• Catch-Up Contributions for Age 50+: The additional $1,000 remains the same, now subject to cost-of-living adjustments starting in future years under SECURE 2.0.
• Updated Income Phase-Out Ranges for Deductible IRA Contributions:some text
  • Single Filers: $79,000–$89,000
  • Married Filing Jointly (if covered by a workplace plan): $126,000–$146,000
  • Married Filing Jointly (if spouse is covered): $236,000–$246,000

Roth IRA Income Phase-Outs

• Single and Heads of Household: $150,000–$165,000
• Married Filing Jointly: $236,000–$246,000

Saver’s Credit

Income limits for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) have increased:

• Married Filing Jointly: $79,000
• Heads of Household: $59,250
• Singles/Married Filing Separately: $39,500

SIMPLE Plans

• Standard Contribution Limit: Increased to $16,500, up from $16,000 in 2024.
• Catch-Up Contributions for Age 50+: Remains at $3,500 for most plans.
• New SECURE 2.0 Catch-Up Rule for Ages 60–63: Employees in this age range can contribute an additional $5,250 for a total of $21,750.

What This Means for You

These updates provide increased opportunities to save for retirement, particularly for those nearing retirement age or earning within the adjusted income ranges. With the SECURE 2.0 Act introducing higher catch-up limits for individuals aged 60 to 63, 2025 is shaping up to be a pivotal year for retirement planning.

We recommend that you take advantage of these changes by reviewing your contributions and ensuring you are maximizing your savings potential. Consult with your Farther advisor to tailor your strategy to accommodate these new limits – and remember, it is important to start planning today to secure your tomorrow.

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