People in their early sixties can make higher catch-up contributions to employer-sponsored retirement plans like 401(k)s beginning in 2025, the IRS announced Friday.
Under a provision of the SECURE 2.0 Act, a higher catch-up contribution limit applies to employees age 60, 61, 62 and 63 who participate in most 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan. For tax year 2025, the new limit for that age group is $11,250.
Those increases don’t apply to SIMPLE 401(k) accounts, which are for small businesses with 100 employees or fewer. For employees age 60-63, catch-up contributions rise to $5,250. For individuals aged 50+, it remains at $3,500.
New Contribution, Deferral Limits
The IRS also announced new cost-of-living adjustments affecting various retirement plan and IRA limits for the year 2025. They include:
•Defined Benefit Plan Limit: Increased from $275,000 to $280,000.
•Defined Contribution Plan Limit: Increased from $69,000 to $70,000.
•Elective Deferral Limit: Increased from $23,000 to $23,500, impacting 401(k) and similar plans.
•Deferred Compensation Plans: Section 457 plans have a new limit of $23,500, up from $23,000.
IRA Phase-Out Limits
The income ranges for determining eligibility to make deductible contributions to traditional IRAs, to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2025.
For Those with Workplace Retirement Plans
For single taxpayers: The IRA phase-out range is increased to between $79,000 and $89,000, up from between $77,000 and $87,000.
Married couples filing jointly: If the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $126,000 and $146,000, up from between $123,000 and $143,000.
For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $236,000 and $246,000, up from between $230,000 and $240,000.
Married individual filing separately: If the individual is covered by a workplace retirement plan, the phase-out range remains between $0 and $10,000.
Roth IRAs
For singles and heads of household: The income phase-out range is increased to between $150,000 and $165,000, up from between $146,000 and $161,000.
For married couples filing jointly: The range is increased to between $236,000 and $246,000, up from between $230,000 and $240,000.
Married individual filing separately: The phase-out range is not increased and remains remains between $0 and $10,000.
Saver’s Credit
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 singles and married individuals filing separately, up from $38,250.
