Each year, in late October or early November, the Internal Revenue Service (IRS) reviews the contribution limit for tax-advantaged retirement plans. The changes implemented by the IRS typically align with inflation for the 12 months prior.
There are some noteworthy changes to retirement contribution limits that you should be aware of heading into 2025.
What does this mean for you?
If you maximize your annual retirement deferral, you should confirm that your percentage or flat-dollar contribution will continue to maximize the annual limit. If your contributions are made on a flat-dollar basis, here's how much you should contribute per pay period based on how many pay cycles your employer has:
What does this mean for you?
If you turn 50 or older in 2025, review your retirement plan deferral. For 2025, you are eligible for a total contribution of $30,500 ($23,000 + $7,500 catch-up). However, investors aged 60-63 can save an additional $11,250 based on changes enacted in the Secure 2.0 Act of 2022 (SECURE 2.0).
If your contributions are made on a flat-dollar basis, here's how much you should contribute per pay period based on how many pay cycles your employer has.
For those aged 50 and over, excluding those who are 60-63 years:
For those aged 60-63:
Those age 50 and above in 2025 will be eligible to contribute an additional $1,000 for a total of $8,000. If you are self-employed, the SEP IRA contribution limit for 2025 has increased from $69,000 to $70,000.
Individuals age 55 and older can contribute an additional $1,000 to the HSA. This catch-up contribution is not adjusted for inflation and stays the same year-over-year.
If you are unsure how these changes may impact you or what to do, don't hesitate to connect with your financial planner. Even though there are several changes to consider, you don't have to go through this alone. SDT is here to support you through all your financial decisions.
Any discussion of taxes is for general information purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate.
CRN202711-7492315
As the Director of Planning & Strategy for Spaugh Dameron Tenny, Jordan applies his academic and practical experience in the creation and maintenance of the firm’s financial plans, as well as coordinating research efforts for products and strategies that may benefit clients. Originally from Canada, Jordan came to Charlotte on a golf scholarship where he attended Queens University of Charlotte. In addition, Jordan has a Master’s degree in Wealth and Trust Management.
