When the calendar turns to 2025, there will be some substantially higher catch up contributions (part of SECURE 2.0) that were signed into law by President Biden in 2022 to enhance retirement savings options.
Here are the details you need to know.
Increased 401(k) Contribution Limits for 2025
- Starting in 2025, the maximum 401(k) contribution limit will increase to $23,500, up from $23,000 in 2024.
- Individuals aged 50 and older can continue to make “catch-up” contributions of up to $7,500, allowing them to save more as retirement approaches.
New “Super” Catch-Up Contributions for Ages 60-63
- Workers aged 60-63 can make “super” catch-up contributions of up to $11,250 annually, adding an extra $3,750 to the standard catch-up limit.
- Combined with the standard contribution, individuals in this age range could potentially contribute a total of $34,750 annually to their workplace retirement plans.
IRA Contribution Limits Remain Unchanged
- The annual limit for Individual Retirement Accounts (IRAs) in 2025 will stay at $7,000, with a catch-up contribution of $1,000 for those 50 and older.
- These limits apply to both traditional IRAs, which may offer tax deductions, and Roth IRAs, which grow tax-free.
Do you wonder if Roth IRA contributions, Roth 401(k) contributions, or Roth IRA conversions could help significantly lower your tax bill or give you more control over your money? Head on over to our Blog to read about Tax Minimization strategies, as well as Roth IRAs.
At One Life Financial Group, we believe life is too short to worry about money. You deserve to enjoy the wealth you created. We are fee-only advisors and don’t sell products that pay commissions or accept referral fees. If you would like to explore opportunities to help maximize your wealth, minimize your lifetime tax bill, and protect your time and money so you have more time for what matters to you, schedule a no-cost, 90-minute consultation.