Trump donor Norm Champ details how the Biden-Harris regulations have hurt Americans’ retirement funds in ‘The Bottom Line.’
It’s officially 2025 and a good time to reevaluate your retirement planning.
of Internal Revenue Service (IRS), in November, announced it had increased the amount individuals can contribute to their 401(k) and other retirement plans to account for inflation.
Each year, the IRS reviews the tax thresholds and limits for various retirement accounts and considers making a cost-of-living adjustment based on the impact of inflation since the previous change.
For the 2025 tax year, the IRS is raising the annual contribution limit for 401(k) plans by $500 from the current limit of $23,000 in 2024 to $23,500 in 2025.
These limits also apply to certain other retirement plans and will be subject to the same increase for the 2025 tax year, including 403(b) retirement plans, government 457 plans, and the government thrift savings plan federal.
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The IRS increased contribution limits and clawback contribution thresholds for 401(k) plans and similar retirement accounts. (Reuters/Reuters Photos)
The IRS is also considering adjustments to the contribution limits for Individual Retirement Accounts (IRAs), including traditional and Roth IRAs. However, the IRS will keep the annual IRA contribution limits constant from 2024 to 2025 at $7,000. It’s also keeping the IRA contribution limit for individuals age 50 and older at $1,000 for 2025.
The supplemental contribution limit that applies to employees age 50 and older enrolled in most 401(k), 403(b), government 457 plans, and Savings Savings Plan it will remain at $7,500 for 2025. Workers who are 50 and older can generally contribute up to $31,000 a year to those retirement plans starting in 2025 under changes made with the passage of the SECURE 2.0 Act of 2022.
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That law also created a higher contribution limit for workers ages 60 to 63 participating in those plans — which will rise to $11,250 instead of $7,500 in 2025.
The IRS also adjusted the thresholds below which taxpayers can contribute to a traditional IRA and receive one tax deduction for their contribution.
The IRS kept the contribution limits for durable IRAs steady, but increased the phase-out phase-out range for traditional IRAs and the contribution phase-out range for Roth IRAs. (J. David Ake/Getty Images/Getty Images)
For individual taxpayers who are also covered by a workplace retirement plan, the traditional IRA contribution tax deduction elimination range is increasing to between $79,000 and $89,000 — from $77,000 and $87,000. For married couples filing joint tax returns, the phase-out range increases to between $126,000 and $146,000, an increase of $3,000 from last year.
The income exclusion range for taxpayers who are contributing to a Roth IRA increased to between $150,000 and $165,000 for individuals and heads of households — from $146,000 to $161,000. For married couples filing jointly, the waiver range increases by $6,000 to between $236,000 and $246,000.
The IRS reviews and potentially updates the contribution and eligibility thresholds for retirement accounts such as 401(k)s and IRAs each year to adjust for inflation. (iStock / iStock)
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of The saver’s loanalso known as the Retirement Savings Contribution Credit, for low- and moderate-income workers it is $39,500 for individuals, $79,000 for married couples filing jointly, and $59,250 for heads of household.
This article was originally published on November 1, 2024.
