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    • IRS sets 401(k) limits for 2025, adds new catch-up for some
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    IRS sets 401(k) limits for 2025, adds new catch-up for some

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    Americans will be able to sneak more workplace retirement plansbefore taxes in 2025.

    The the IRS said on Friday raised the annual employee deferral limit to $23,500 from $23,000 in 2024 for workplace plans, including 401(k)s, 403(b)s, government 457 plans, and the federal government Thrift Savings Plan. Recovery contributions for those participants age 50 and older it will remain at $7,500, meaning their total contribution for 2025 is capped at $31,000.

    In 2023, only 14% of employees maximized their work schedulesaccording to Vanguard How to save America report. In plans that offer catch-up contributions, 15 percent of participants age 50 or older contributed more, it said.

    Starting in 2025, employees age 60 to 63 who participate in one of these work plans have a higher catch-up contribution limit. That cap is $11,250, instead of $7,500.

    “Once you turn 64, you’re no longer eligible for a super catch-up contribution and are limited to your regular catch-up contribution amount,” said CPA Richard Pon of San Francisco, California.

    But remember, “right now, technically, there’s no law that says employers have to provide a super recovery contribution, so I think an employer’s retirement plan needs to be changed to allow in specifically a super-recovery contribution’.

    What are the IRA limits in 2025?

    Annual contribution limit per year scott $7,000 remains. The IRA catch-up contribution limit for people in their 50s also remained at $1,000 for 2025, after a cost-of-living adjustment, the IRS said.

    Don’t put all your eggs in one basket: Are you just focusing on your 401(k) or IRA? Why it might not be the best retirement move.

    Have the income ranges for contributions to traditional and Roth IRAs changed?

    Yes, income varies to determine eligibility to make deductible contributions to a traditional IRA, to contribute to Roth IRAss and claim on 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 increased to $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 has increased to $126,000 to $146,000, from $123,000 to $143,000.
    • For an IRA taxpayer not covered by a workplace retirement plan and married to someone who is, the phase-out range is $236,000 to $246,000, up from $230,000 and $240,000.
    • For a married individual filing separately 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, $146,000 to $161,000. For married couples filing jointly, the income phase-out range increased to $236,000 and $246,000, from $230,000 to $240,000. The phase-out range for a married individual filing separately and contributing to a Roth IRA is not 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 single and married filing separately, up from $38,250.

    Medora Lee is USA TODAY’s money, markets and personal finance reporter. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance advice and business news every morning Monday through Friday.

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