IRS Increases Contribution Limits for Retirement Accounts in 2025 – Full Guide

Saving enough money for retirement can be a challenge for many Americans. With the economy constantly changing, it’s more important than ever to save as much as possible, especially for those nearing retirement. To help, the IRS has updated the rules for how much people can contribute to their retirement accounts. Here’s what you need to know about the changes coming in 2025.

IRS Increases Contribution Limits for 2025

In 2025, the IRS has increased the amount you can contribute to certain retirement accounts, which is a great way to help you save more for the future. For example, the contribution limit for employee deferrals has gone up from $23,000 in 2024 to $23,500 in 2025. This increase applies to popular retirement plans like 401(k)s, 403(b)s, government 457 plans, and the federal Thrift Savings Plan. However, if you’re 50 years or older, there’s a special catch-up contribution option. This allows older workers to contribute more money to their retirement accounts, helping them build up savings in their final years of work. For 2025, this catch-up contribution will still be $7,500, meaning that those over 50 can save a total of $31,000.

New “Super Catch-Up” for People Aged 60-63

For workers between the ages of 60 and 63, there’s even better news. The IRS has introduced a new “super catch-up” option, allowing people in this age group to contribute up to $11,250, which is higher than the regular catch-up amount. However, once you turn 64, you’ll have to go back to the regular catch-up contribution of $7,500. It’s important to note that not all employers are required to offer this super catch-up option, so if you’re interested in it, you may need to make sure your workplace plan is updated to include this option.

IRA Contribution Limits for 2025

The IRS also made changes to the contribution limits for IRAs. For 2025, the maximum you can contribute to an IRA is still $7,000, but if you’re 50 or older, you can add an extra $1,000. This makes it easier for older workers to save even more for retirement.

Income Limits for Traditional and Roth IRAs

Income limits for contributing to Traditional and Roth IRAs will also rise in 2025. If you’re covered by a workplace retirement plan, here’s a look at the new limits:

• Single taxpayers: The phase-out range for contributions goes from $79,000 to $89,000, up from $77,000 to $87,000.
• Married couples filing jointly: The phase-out range is now $126,000 to $146,000, an increase from the previous $123,000 to $143,000.
• For Roth IRAs:
  • Single filers and heads of household can contribute if their income is between $150,000 and $165,000.
  • Married couples filing jointly can contribute if their income is between $236,000 and $246,000.

Saver’s Credit Income Limits Increase

The Saver’s Credit is a program that helps people with lower to moderate incomes save for retirement. In 2025, the income limits to qualify for this credit will also increase:

• Married couples: The limit is now $79,000, up from $76,500.
• Heads of household: The limit is $59,250, up from $57,375.
• Single filers or married individuals filing separately: The limit is now $39,500, up from $38,250.

The IRS changes for 2025 make it easier for Americans, especially older workers, to save for retirement. With higher contribution limits and new options like the “super catch-up,” it’s important to take advantage of these changes to ensure a more secure retirement. Check with your employer to see if they offer the new options, and consider contributing more to your IRA and retirement accounts to build up your savings.

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