Trump donor Norm Champ details on ‘The Bottom Line’ how Biden-Harris rules are hurting Americans’ retirement funds.
It’s officially 2025 and a good time to reevaluate your retirement planning.
Internal Revenue Service (IRS), In November, it announced it had increased the amount individuals can contribute to their 401(k) and other retirement plans in line with inflation.
Each year, the IRS reviews the tax thresholds and limits for various retirement accounts and considers making cost-of-living adjustments based on the impact of inflation since the last change.
For the 2025 tax year, the IRS is raising annual contribution limits 401(k) plans Increase by $500 from the current limit of $23,000 in 2024 to $23,500 in 2025.
Those limits also apply to many other retirement plans and will undergo similar increases for the 2025 tax year, including 403(b) retirement plans, government 457 plans and the federal government’s thrift savings plan.
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The IRS increased the contribution limits and catch-up contribution limits for 401(k) plans and similar retirement accounts. (Reuters/Reuters Photos)
The IRS also considers adjustments to the contribution limits for individual retirement accounts (IRAs). Traditional and Roth IRAHowever, the IRS will keep the IRA annual contribution limit steady at $7,000 from 2024 to 2025. It is also maintaining the IRA catch-up contribution limit at $1,000 for individuals age 50 and older through 2025.
The catch-up contribution limit, which applies to employees age 50 and older enrolled in most 401(k), 403(b), government 457 plans, and thrift savings plan Will remain at $7,500 for 2025. Workers age 50 and older can generally contribute up to $31,000 annually to retirement plans starting in 2025 under changes made with the enactment of the SECURE 2.0 Act of 2022.
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That law also created a higher catch-up contribution limit for workers ages 60 to 63 participating in those plans — which will be raised to $11,250 in 2025 instead of $7,500.
The IRS also adjusted the limits under which taxpayers can contribute to and receive contributions to traditional IRAs. tax cut For his contribution.
The IRS kept the contribution limits for IRAs stable, but increased the deduction phase-out limits for traditional IRAs and the contribution phase-out limits for Roth IRAs. (J. David Ake/Getty Images/Getty Images)
For individual taxpayers who are covered under a workplace retirement plan, the traditional IRA contribution tax deduction phase-out limit is being increased from $77,000 and $87,000 to between $79,000 and $89,000. For married couples filing joint tax returns, the phase-out threshold increases to between $126,000 and $146,000, an increase of $3,000 from last year.
The income phase-out limits for taxpayers contributing to Roth IRAs increased to between $150,000 and $165,000, for individuals and heads of households – to between $146,000 and $161,000. For married couples filing jointly, the phase-out limit increases by $6,000 to between $236,000 and $246,000.
The IRS reviews and potentially updates the contribution and eligibility limits for retirement accounts such as 401(k) and IRA accounts every year to adjust for inflation. (iStock/iStock)
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saver’s creditAlso known as the Retirement Savings Contribution Credit, it is $39,500 for individuals, $79,000 for married couples filing jointly and $59,250 for heads of household for low- and moderate-income workers.
This article was originally published on November 1, 2024.
