The 2025 retirement plan limits have recently been announced by the IRS.
These new limits are effective January 1, 2025.
If you’re an employee and a retirement plan participant, be sure to contact your employer as soon as possible if you wish to change your retirement plan salary deferrals for 2025. Of course, if you’re a Springwater client, we’re happy to assist!
If you’re an employer and either don’t have a retirement plan in place or have questions about your existing one, please contact us for a complimentary tailor-made proposal and comparison with your current plan. You’ll have happier, more satisfied employees while also saving money.
Do you have questions about saving and investing for retirement? Contact us today to see how our team at Springwater Wealth can help you.
401(k)s, 403(b)s, etc. The standard contribution limit for employee salary deferrals to a qualified retirement plan – 401(k), 403(b), most 457 plans, and the government’s Thrift Savings Plan – is increased to $23,500 for 2025 (was $23,000 for 2024).
The “Catch-up”. The “catch-up” deferral limit for these plans remains at $7,500 for 2025 (was $7,500 in 2024), so a person who is age 50 or older can defer a maximum of $31,000 in 2025 ($23,500 regular deferral plus a $7,500 catch-up).
Notably, the super catch-up contribution provision in the SECURE 2.0 Act of 2022 takes effect in 2025. It permits those aged 60 through 63 to contribute $11,250 instead of $7,500 in 2025, according to the IRS’s update.
Annual Defined Contribution Limit. The maximum “annual additions” limit (salary deferrals, plus profit sharing, plus forfeiture allocations, etc) to a defined contribution plan is increased to $70,000 for 2025 (was $69,000 for 2024). Note that the catch-up deferral is in addition to this, so the annual contribution limit for a person age 50 or older is $77,500.
SEP IRAs. The contribution limit for a SEP IRA in 2025 is increased to the lesser of (a) $70,000, or (b) 25% of the employee’s salary (was $69,000 in 2024). [Note that a special computation is required to determine the contribution amount for self-employed individuals contributing for themselves]. The compensation limit used in the savings calculation is increased to $350,000 for 2025 (was $345,000 for 2024).
Solo 401(k)s. The contribution limit for a Solo 401(k) in 2025 is increased to the lesser of (a) $70,000, or (b) 100% of the employee’s salary. Note that the catch-up deferral is in addition to this, so the annual contribution limit for a person age 50 or older is $77,500.
IRAs. The contribution limits for Traditional and Roth IRAs is unchanged at $7,000 in 2025 (was $7,000 in 2024). The catch-up contribution for a person age 50 or older remains at $1,000 in 2025, for a total of $8,000.
Simple IRAs. The contribution limit for a Simple IRA is increased to $16,500 for 2025 (was $16,000 in 2024). The catch-up contribution for a person age 50 or older remains at $3,500 in 2025 (was $3,500 in 2024), for a total of $20,000.
In addition, a higher catch-up contribution limit applies for employees aged 60 through 63 who participate in SIMPLE plans. For 2025, this higher catch-up contribution limit is $5,250.
Defined Benefit Plans. Finally, the limitation on the annual benefit of a “defined benefit” plan is increased to $285,000 in 2025 (was $275,000 in 2024).
Details on these and other retirement-related cost-of-living adjustments for 2025 are in Notice 2024-80, available on IRS.gov.
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