Current:Home > NewsIRS raises 401(k) contribution limits, adds super catch-up for 60-63 year olds in 2025 -TradeWise
IRS raises 401(k) contribution limits, adds super catch-up for 60-63 year olds in 2025
View
Date:2025-04-12 18:35:11
Americans will be able to sock away more in their workplace retirement plans, before taxes, in 2025.
The IRS said on Friday it increased the annual employee deferral limit to $23,500, from $23,000 in 2024, for workplace plans, including 401(k)s, 403(b)s, governmental 457 plans and the federal government’s Thrift Savings Plan. Catch-up contributions for those participants aged 50 and up will remain at $7,500, which means their total contribution for 2025 is capped at $31,000.
In 2023, only 14% of employees maxed out their workplans, according to Vanguard's How America Saves report. In plans offering catch-up contributions, 15% of participants 50 or older contributed more, it said.
Starting in 2025, employees aged 60 to 63 years old who participate in one of those work plans have a higher catch-up contribution limit. That cap is $11,250, instead of $7,500.
"Once you hit age 64, you are no longer eligible for a super catch-up contribution and are limited to the regular catch-up contribution amount," said certified public accountant Richard Pon in San Francisco, California.
But remember, "right now, technically, there is no law that says that employers must offer a super catch-up contribution so I believe an employer’s retirement plan must be amended to specifically allow for a super catch-up contribution."
What are the IRA limits in 2025?
The limit on annual contributions to an IRA remains $7,000. The IRA catch‑up contribution limit for individuals aged 50 also stayed at $1,000 for 2025, after a cost-of-living adjustment, the IRS said.
Don't put all eggs in one basket:Focusing only on your 401(k) or IRA? Why that may not be the best retirement move.
Did income ranges change for contributions to traditional and Roth IRAs?
Yes, the income ranges to determne eligibility to make deductible contributions to a traditional IRA, to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2025, the IRS said.
Here are the phase‑out ranges for 2025:
- For single taxpayers covered by a workplace retirement plan, the phase-out range rose to between $79,000 and $89,000, from $77,000 to $87,000.
- For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range increased to $126,000 to $146,000, from $123,000 to $143,000.
- For an IRA contributor not covered by a workplace retirement plan and married to someone who is covered, the phase-out range is $236,000 to $246,000, up from $230,000 and $240,000.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
- The income phase-out range for taxpayers making contributions to a Roth IRA is $150,000 to $165,000 for singles and heads of household, up from $146,000 to $161,000. For married couples filing jointly, the income phase-out range rose to between $236,000 and $246,000, from $230,000 to $240,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA isn't subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
- The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $79,000 for married couples filing jointly, up from $76,500; $59,250 for heads of household, up from $57,375; and $39,500 for singles and married individuals filing separately, up from $38,250.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
veryGood! (78)
Related
- Off the Grid: Sally breaks down USA TODAY's daily crossword puzzle, Triathlon
- Climate Advocacy Groups Say They’re Ready for Trump 2.0
- 1 dead, 2 children injured in wrong-way crash; driver suspected of DWI: Reports
- Joey Logano wins Phoenix finale for 3rd NASCAR Cup championship in 1-2 finish for Team Penske
- The company planning a successor to Concorde makes its first supersonic test
- Northern Taurid meteor shower hits peak activity this week: When and where to watch
- Brian Kelly asks question we're all wondering after Alabama whips LSU, but how to answer?
- How Ben Affleck Really Feels About His and Jennifer Lopez’s Movie Gigli Today
- Are Instagram, Facebook and WhatsApp down? Meta says most issues resolved after outages
- Tennessee fugitive accused of killing a man and lying about a bear chase is caught in South Carolina
Ranking
- South Korea's acting president moves to reassure allies, calm markets after Yoon impeachment
- AIT Community Introduce
- Will Reeve, son of Christopher Reeve, gets engaged to girlfriend Amanda Dubin
- Trump announces Tom Homan, former director of immigration enforcement, will serve as ‘border czar’
- North Carolina justices rule for restaurants in COVID
- Ashton Jeanty stats: How many rushing yards did Boise State Heisman hopeful have vs Nevada
- FSU football fires offensive, defensive coordinators, wide receivers coach
- What to know about Mississippi Valley State football player Ryan Quinney, who died Friday
Recommendation
The Super Bowl could end in a 'three
'Joker 2' actor pans DC sequel as the 'worst film' ever: 'It has no plot'
Kirk Herbstreit berates LSU fans throwing trash vs Alabama: 'Enough is enough, clowns'
MLS playoff teams set: Road to MLS Cup continues with conference semifinals
Person accused of accosting Rep. Nancy Mace at Capitol pleads not guilty to assault charge
BITFII Introduce
The Cowboys, claiming to be 'all in' prior to Dak Prescott's injury, are in a rare spot: Irrelevance
FSU football fires offensive, defensive coordinators, wide receivers coach