IRS Announces 2025 Retirement Plan Contribution Limits
On November 1, 2024, the Internal Revenue Service announced changes to the amounts that individuals can contribute to various types of retirement plans in tax year 2025.
Notice 2024-80 sets forth the cost-of-living adjusted limitations for contributions by employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plans, as well as for those who have IRAs.
Highlights of the Changes:
- The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $23,500, up from $23,000.
- The limit on annual contributions to an IRA remains $7,000. The IRA catch-up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost-of-living adjustment, but it will remain $1,000 for 2025.
- The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan remains $7,500 for 2025. Therefore, participants in most 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan who are 50 and older generally can contribute up to $31,000 each year, starting in 2025. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62, and 63 who participate in these plans. For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500.
The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the Saver’s Credit all increased for 2025.
If you have questions about this notice or retirement plan contribution limits generally, please contact Gary Remer at Maddin Hauser.