IMPORTANT: 2025 Retirement Contribution Limits and Updates

Maximize Your Retirement Savings and Secure Your Future

At Heritage Financial Planning, we believe that strategic retirement planning is essential to achieving long-term financial security. Each year, the IRS adjusts contribution limits for retirement accounts, providing new opportunities for individuals to save more effectively. In 2025, significant changes to 401(k)s, IRAs, and income restrictions create valuable opportunities for retirement savers. Here’s a comprehensive breakdown of what you need to know.

401(k) Contribution Limits

For 2025, the 401(k) contribution limit has increased, allowing employees to contribute up to $23,000, up from $22,500 in 2024. This adjustment enables individuals to grow their retirement savings while leveraging the tax benefits associated with 401(k) plans.

For individuals aged 50 and older, catch-up contributions have also increased. Those eligible can contribute an additional $8,000, bringing their total maximum contribution to $31,000. This increase is especially beneficial for individuals nearing retirement who want to maximize their savings in their final working years.

IRA Contribution Limits

For Individual Retirement Accounts (IRAs), the 2025 contribution limit is $7,000, applying to both traditional and Roth IRAs. Those aged 50 and above can make an additional $1,000 catch-up contribution, allowing for a total contribution of $8,000 per year.

Income Restrictions for IRAs

While contribution limits are increasing, income restrictions still play a crucial role in determining Roth IRA and traditional IRA eligibility.

Roth IRA Income Limits

The 2025 income phase-out ranges for Roth IRA contributions are:

Single filers and heads of household: $150,000–$165,000 (up from $138,000–$153,000 in 2024).
Married filing jointly: $230,000–$245,000 (up from $218,000–$233,000 in 2024).

If your income exceeds these ranges, your ability to contribute to a Roth IRA may be reduced or eliminated.

Traditional IRA Deductibility Limits

For those covered by a workplace retirement plan, traditional IRA deductibility is subject to income limits:

Single filers: $75,000–$85,000 (up from $73,000–$83,000 in 2024).
Married filing jointly (if the contributor is covered by a workplace plan): $125,000–$145,000 (up from $116,000–$136,000 in 2024).
Spouse not covered by a workplace plan but married to someone who is: $208,000–$228,000 (up from $204,000–$224,000 in 2024).

Saver’s Credit Income Limits

Low- and moderate-income earners can benefit from the Saver’s Credit, which offers a tax incentive for retirement contributions. The adjusted gross income (AGI) limits for 2025 are:

Single filers: Up to $36,000
Heads of household: Up to $54,000
Married filing jointly: Up to $72,000

Other Retirement Plans

For those utilizing 403(b), 457(b), or the federal Thrift Savings Plan (TSP), contribution limits mirror those of 401(k) plans. SIMPLE IRA contribution limits have increased to $16,000, with a catch-up contribution of $3,500 for individuals aged 50 and older.

Key Takeaways for 2025

Increased Limits – Take advantage of higher contribution limits to maximize tax-advantaged growth.
Catch-Up Contributions – If you’re 50 or older, boost your savings with additional contributions.
Income Restrictions Matter – Be mindful of your income to ensure Roth IRA and traditional IRA eligibility.
Strategic Planning is Essential – Regularly review your retirement savings strategy and adjust contributions accordingly.

Optimize Your Retirement Strategy with Heritage Financial Planning

At Heritage Financial Planning, we utilize our exclusive HFP S.T.A.R. Strategy to guide our clients toward a financially secure retirement. Our approach ensures that your interests always come first. Whether you’re maximizing contributions, navigating tax advantages, or planning for retirement income, our experienced advisors are here to help.

Take control of your financial future—contact our office today to schedule a consultation and start optimizing your retirement savings with a strategy tailored to your goals.