2025 Retirement Plan Contribution Limits

On November 1st, the IRS announced the updated retirement plan contribution limits for 2025 (included in Notice 2024-80). These changes offer new opportunities for individuals to boost their retirement savings. Here’s a quick rundown of the key points: 

401(k), 403(b), most 457 Plans, and Thrift Savings Plans: The annual contribution limit for traditional workplace retirement plans has increased from $23,000 in 2024 to $23,500 in 2025. This increase enables employees to set aside even more for their retirement. 

Catch-Up Contributions for Age 50+: Participants who are 50 or older can make additional “catch-up” contributions to their retirement account. In 2025, the catch-up contribution limit remains $7,500. Beginning in 2025, SECURE 2.0 Legislation will allow employees aged 60-63 to make a catch-up contribution of $11,250, if their employer opts to include this provision. Catch-up contributions offer several valuable benefits for retirement planning, including tax advantages, for those wanting to increase savings as they approach retirement age. 

IRA Contribution Limits: The contribution limit for Individual Retirement Accounts (IRAs) remains at $7,000 in 2025. 

Income Limits for Roth IRA Contributions: The IRS has also adjusted the income limits for Roth IRA eligibility, allowing more people to qualify for Roth contributions. For 2025, the phase-out range starts at $153,000 for single filers and $228,000 for married couples filing jointly. 

Savers Credit: For 2025, the income limits for the Saver’s Credit (or Retirement Savings Contributions Credit) for low- and moderate-income workers are as follows: 

• $79,000 for married couples filing jointly, up from $76,500 

• $59,250 for heads of household, up from $57,375 

• $39,500 for singles and married individuals filing separately, up from $38,250 

Section 415 Increases: Beginning January 1, 2025, the annual benefit limit for defined benefit plans under IRC Section 415(b)(1)(A) will increase to $280,000, up from $275,000 in 2024. For defined contribution (DC) plans, the limit under IRC Section 415(c)(1)(A) will rise to $70,000, compared to the 2024 limit of $69,000. Read more here. 

Health Saving Account (HSA) Contribution Limits:

• Individual Coverage: The maximum contribution for individuals with self-only coverage increases from $4,150 to $4,300.
• Family Coverage: Families with HSA-qualified plans can contribute up to $8,550 in 2025, up from $8,300 in the previous year.
• Catch-Up Contributions: Individuals aged 55 or older can still make catch-up contributions of up to $1,000 on top of the regular contribution limits.

Flexible Spending Account (FSA) Contribution Limits: 

• Individual Contributions for Health and Limited FSA: Increases to $3,300 from $3,200.
• Dependent Care Assistance Account: The maximum employee contribution for married and single individuals filing their taxes jointly and separately remains $5,000 and $2,500, respectively.
• Monthly Limit – Transportation/Parking: Increased to $325 from $315.

Review a comprehensive list of all COLA adjustments here.

The IRS’s announcement of the updated retirement plan contribution limits for 2025 provides a valuable opportunity for individuals to enhance their retirement savings strategies. Looking for more insights on retirement planning? Explore the free resources available at BPAS University!