2025 Numbers to Know

The IRS has announced contribution savings limits for retirement savings accounts for 2025.  Make sure you let your payroll department know that you want to increase your contributions to these plans. 

The maximum amount employees can contribute to a 401(k) plan will increase to $23,500 in 2025 (up from $23,000 in 2024). If you're age 50 or older, you can also make catch-up contributions of up to $7,500 to these plans in 2025. In addition, employees age 60, 61, 62, and 63 (on 12/31/2025) can now make a larger catch up contribution in the total amount of $11,250.  Here is what else you need to know:

*Amounts could be higher for certain plans

More taxpayers are eligible to make Roth IRA contributions due to the fact that the income limitations are rising. If your filing status is single or head of household, you can contribute the full $7,000 ($8,000 if you are age 50 or older) to a Roth IRA if your Modified Adjusted Gross Income (MAGI) is $150,000 or less (up from $146,000 in 2024). And if you are married and filing a joint return, you can make a full contribution if your MAGI is $236,000 or less (up from $230,000 in 2024). Just keep in mind that contributions cannot exceed 100% of your earned income. The following chart shows the income phaseout for Roth IRA contributions in 2025:

Roth IRA

There are a few other updates for 2025 that are worth noting:

  • The wage limit for Social Security tax has increased to $176,100 (from $168,600 in 2024).  So, until an employee reaches $176,100 in wages, their employer has to withhold the 6.2% of Social Security taxes from wages. 

  • Health Savings Account contribution limits are $8,550 for a family plan and $4,300 for an individual plan.  There is also a $1,000 catch-up available for those 55 and over.

  • The annual gift tax exclusion is increasing to $19,000 per donee (up from $18,000). 

So, as we head into 2025, make sure you double check (and increase) your retirement plan contributions with your employer. And don’t forget to save to your IRA and Roth IRA if you are eligible to do so. Give our office a call if you have questions on how best to save for your retirement goals.

 

Corporate Sponsored 40..., Financial Planning, General Financial Plan..., Investments, Mid Career Professional, Personal Finance, Pre-Retiree, Retirement PlanningDave Trettelfinancial planning, General Financial Planning, 401k, Personal Finance, Retirement Planning, Roth IRA, IRA, investments