Retirement Savings for 2025
If you are the type of person, like me, who likes to plan ahead, you might already be thinking about your budget and savings plans for next year and in particular your retirement savings. As we approach the end of 2024, you may want to review your savings strategies and set some intentions for the new year, so that you can begin to implement them early in January. We encourage our clients to take full advantage of their retirement contribution options to the extent possible. Below are some of the options to consider and contribution limits that have been released by the IRS for 2025:
If you have an employer retirement plan
The 2025 allowable contribution to plans available through your employment, including 401(k), 403(b)*, and 457(b)* plans, will increase to at least $23,500.
The catch-up contribution for employees 50 and over will still be $7,500. In other words, those individuals can contribute a total of $31,000 to their retirement plan through payroll deductions.
One important exception to the number noted above is for employees who turn ages 60-63 in 2025: there will be something referred to as “super catch-up contributions” which will allow those in this limited age bracket to contribute an additional $11,250 instead of $7,500. This is intended to give those approaching retirement additional options to contribute at higher levels, totaling $34,750 for this special age bracket.
Note that employer matching contributions and/or profit-sharing contributions are in addition to the limits discussed above.
| AGE | AMOUNT |
| Age 49 or younger at the end of 2025 | $23,500 |
| Age 50 or over at the end of 2025 | $31,000 |
| Turning 60, 61, 62, or 63 in 2025 | $34,750 |
| Turning 64 or older in 2025 | $31,000 |
A new tax rule delayed until 2026 may change the tax treatment of catch-up contributions to employer plans for some employees. Employees who are higher earners would be forced to make their catch-up contributions on a Roth basis. Stay tuned for more info on this, as we get closer to the new rule’s implementation.
*Note that employees with 457(b) plans, or 403(b) plans and 15 years of service, may be permitted to contribute more. If you have one of these types of plans, your financial planner should be able to provide additional guidance on their more complex contribution rules.
If you are saving outside an employer retirement plan
You can contribute $7,000 to a Traditional IRA or a Roth IRA if you or your spouse has earned income for 2025. The limit on your contribution will be the lessor of $7,000 or your combined earned income. Note also that there are specific rules detailing upper income limits and other situations which may prohibit you from contributing to certain savings vehicles.
The catch‑up contribution limit on IRAs/Roth IRAs for those 50 and over at the end of the tax year is an additional $1,000 for 2025. This means that those individuals can contribute up to $8,000 total.
| AGE | AMOUNT |
| Age 49 or younger at the end of 2025 | $7,000 |
| Age 50 or over at the end of 2025 | $8,000 |
If you are self-employed, there are additional savings vehicles which may allow you to contribute at higher contribution levels than IRAs and Roths.
There are many nuances to the above rules, and reaching out to your financial planner or CPA will help you to determine which strategy would be most beneficial to you, given your unique tax situation each year. Regardless of the method, planning on maximizing your retirement savings will be a good first step to take in 2025.