The IRS has increased retirement plan contribution limits for 2025, adjusted for inflation. The contribution limits for 2025 are:

IRAs:

Traditional and Roth: the 2025 annual contribution limits will remain unchanged from 2024’s $7,000 for those under 50, while those age 50+ can contribute an additional “catch-up” of $1,000 per year for a total contribution limit of $8,000. Note that this limit applies to all IRAs held by a single taxpayer, not each IRA – i.e. if you want to contribute to more than one IRA in 2025, the total amount contributed cannot be more than the limit for your age ($7,000 or $8,000, depending on whether you are over or under 50).

SEP IRAs:

The contribution limit for 2025 (made by the employer on behalf of an employee) is the lesser of 1) 25% of the first $350,000 of compensation (with some minor adjustments) or 2) $70,000 per employee (an increase from the 2024 limit of $69,000). No catch-up contributions are permitted.

SIMPLE IRAs:

The 2025 maximum contribution will rise to $16,500, up from $16,000 for 2024. If you are over 50, a catch-up contribution of up to $3,500 – unchanged from 2024 – is permitted. However, for SIMPLE IRA account owners between the ages of 60 and 63, catch-up contributions greater than $5,000 or 150% of the over-50 catch-up limit can be made. For 2025, those aged 60-63 can make catch-up contributions of $5,250 to SIMPLE IRAs in 2025. Cost of living adjustments will be made to this catch-up limit starting in 2026.

Employer-Sponsored Retirement Plans:

The 2025 contribution limit for 401(k), 403(b), and most 457 plans will rise from $23,000 in 2024 to $23,500 for employees under 50. For those over 50, a catch-up contribution of up to $7,500 annually is permitted – no change from 2024 – allowing you to contribute up to $31,000, assuming your employer-sponsored retirement plan is structured to allow catch-up contributions.

We strongly recommend contributing the total amount to your retirement account(s) – or as close to the limits as possible if you can’t max out.

Further, we would advise checking into all retirement options available through your employer. Public schools, colleges, universities, churches, hospitals, and other tax-exempt organizations may offer more than one option, including 401(k), 403(b), and/or 457 plans. They may also allow you to participate in and contribute to more than one employer-sponsored plan—e.g., offering you both a 401(k) and a 403(b) plan.

If you have a 401(k) and 403(b) plan account, be aware that the total annual contribution to these employer-sponsored retirement plans is $23,500 for 2025 – or $31,000 if you are over 50. However, having more than one employer-sponsored plan account may still be a good idea, especially if one or more plans do not allow catch-up contributions. In such a case, you can contribute the amount of your catch-up to the second retirement plan account – the IRS permits you to treat this additional contribution as a catch-up for their purposes, even if your plan does not.

However, if your employer offers you both a 401(k) plan and a 457 plan, a deferred compensation plan, you can contribute $23,500 to each plan in 2025, not counting catch-up contributions. If you have this option available and are over 50, you can contribute up to $31,000 tax-deferred to each account for 2025 – $23,500 plus $7,500 in catch-up. This would mean that, for those over 50, a total tax-deferred contribution of $62,000 can be made for 2025.

For 2025, workers turning 60 to 63 may be able to contribute a super catch-up of $11,250 to 401(k) and similar plans.

Final Thoughts:

Certain strictures and limits on income eligibility exist to fully deduct contributions from your taxable income for some retirement plans. Consult your virtual CFO or another trusted financial advisor to ensure you get every possible benefit you are legally entitled to.

If you have any questions about leveraging these new contribution limits to maximize your retirement assets, reduce your tax liabilities, and plan for a secure and happy retirement, our vCFOs / financial planners are always here to help.

Please click here to email us directly – let us help you plan to make the most of your retirement savings.

Until next time –

Peace,

Eric