What's Happening
2 hours ago

Mark Zuckerberg Follows Elon Musk's Footsteps As Meta Reportedly Plans Major Investment Into AI-Powered Humanoid Robots

benzingabenzinga.com
3 hours ago

Do You Know How Long $1 Million Will Last If You Retire At 65? Here's A Hint – Longer Than You're Led To Think!

benzingabenzinga.com
3 hours ago

IRS Reportedly Gears Up To Lay Off Thousands Of Workers Elon Musk's DOGE Looks To Shrink The Tax Agency

benzingabenzinga.com
4 hours ago

TRADEPULSE POWER INFLOW ALERT: PALO ALTO NETWORKS INC. (PANW) MOVES UP OVER 5% AT ITS HIGH AFTER TRADEPULSE ALERT

benzingabenzinga.com
4 hours ago

Jeff Bezos-Backed Anthropic Fights US Proposal Blocking Google From Investing In AI Startups, Says It Would Benefit Rivals OpenAI, Mark Zuckerberg's M...

benzingabenzinga.com
5 hours ago

Trump Administration 'Unlikely' To Support TSMC's Control Of Intel's US Chip Factories: Report

benzingabenzinga.com
6 hours ago

Trump's 'Liquid Gold' Plan: Can He Really Make America Rich Again, or Do Oil Giants Hold the Real Power?

benzingabenzinga.com
7 hours ago

Elon Musk's Government Gig Has No Salary, No Job Title, And Plenty of Power

benzingabenzinga.com
8 hours ago

Why Altcoins Were Winning This Week

foolfool.com
8 hours ago

Russell Vought Orders Pause On All CFPB Activity, Critics Say This Gives Corporations 'The Green Light To Scam Families'

benzingabenzinga.com
8 hours ago

Prediction: Zillow Will Beat the Market. Here's Why.

foolfool.com
8 hours ago

$1000 Invested In Super Micro Computer 15 Years Ago Would Be Worth This Much Today

benzingabenzinga.com
8 hours ago

'We're Going To Find Billions' – Trump Targets Pentagon For Deep Spending Cuts

benzingabenzinga.com
8 hours ago

Here's How Much You Would Have Made Owning Meta Platforms Stock In The Last 10 Years

benzingabenzinga.com
8 hours ago

If You Invested $1000 In This Stock 15 Years Ago, You Would Have This Much Today

benzingabenzinga.com
9 hours ago

Why Siemens Stock Crept Higher on Friday

foolfool.com
9 hours ago

Here's How Much You Would Have Made Owning Regeneron Pharmaceuticals Stock In The Last 15 Years

benzingabenzinga.com
9 hours ago

This Magnificent Artificial Intelligence (AI) Stock Delivered Stellar Gains in 2024. It Can Jump Another 60%

foolfool.com
9 hours ago

Here's How Much You Would Have Made Owning American Tower Stock In The Last 20 Years

benzingabenzinga.com
9 hours ago

Why Federal Realty Investment Trust Stock Just Tanked by 6%

foolfool.com

3 Retirement Savings Changes That Take Effect in 2025

Saving in 401(k)s and IRAs is a smart way to put money aside for retirement. However, there are rules you need to know in order to take maximum advantage of these accounts.

Moreover, as with most things in the world of finances, nothing is ever truly set in stone, and adjustments to key retirement accounts provisions are common from year to year. As we approach 2025, you should be aware of three key changes that will take effect come January.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »

Two people looking at a laptop with a dog sitting beside them.

Image source: Getty Images.

1. 401(k) contribution and catch-up limits are increasing

A 401(k) has a pretty high contribution limit compared to other retirement accounts, which is partly why it serves as most people’s main retirement account. To help participants save more for retirement (while getting a tax break), the 401(k) contribution limit typically rises with inflation, and the limit will indeed increase in 2025.

At the start of 2025, people with a 401(k) can contribute $23,500 to their account, a $500 increase from 2024’s limit.

The contribution limit isn’t the only thing increasing, either. The catch-up contribution — which is intended to give older workers a boost to their retirement savings — will also increase.

As it stands, people 50 and older can add an additional $7,500 to their 401(k) contributions, bringing the total to $31,000 for 2025. That number won’t change for those between 50 and 59 years old. However, the notable change is that people aged 60 to 63 can now contribute an additional $11,250, bringing their contribution limit to $34,750.

A $3,750 increase in catch-up contributions can make a noticeable difference to someone’s retirement savings. The extra amount itself may not be life-altering, but it’s an extra $3,750 that now has a chance to grow and compound.

2. Traditional IRA contribution deduction eligibility is changing

Contributions to a traditional IRA aren’t automatically deducted from your paycheck pre-tax like a 401(k), but you can deduct your contributions if you meet certain requirements. In 2025, the maximum amount you can contribute to an IRA (traditional and Roth) is $7,000, or $8,000 if you’re 50 or older.

Whether or not your contributions are tax-deductible depends on income, filing status, and whether you or your spouse are covered by a workplace retirement (like a 401(k) or 403(b)). If either of you are covered by a workplace plan, your income limit is less generous.

Below are the phase-out ranges for 2024 and 2025:

Filing Status 2024 Phase-Out Range 2025 Phase-Out Range
Single (covered by a workplace retirement plan) $77,000–$87,000 $79,000–$89,000
Married filing jointly (IRA contributor covered) $123,000–$143,000 $126,000–$146,000
Married filing jointly (IRA contributor not covered; spouse covered) $230,000–$240,000 $236,000–$246,000
Married filing separately (covered by a workplace plan) $0–$10,000 $0–$10,000

Source: IRS.

If your income falls below the phase-out range, you can deduct all of your contributions; if it’s above the phase-out range, you can’t deduct any contributions; if it’s in the phase-out range, you can deduct between $0 and $7,000 or $8,000.

Having the income requirements phase out is helpful for avoiding situations in which someone makes $1 above the limit and automatically becomes ineligible for the tax deduction.

3. Roth IRA income limits have increased

There are plenty of reasons to love Roth IRAs, including the tax-free withdrawals you can take in retirement. Unfortunately, the Roth IRA has one noteworthy downside: a restriction on how much you can earn and still be eligible to contribute to one.

The good news is that the income limit has been increased for 2025:

Filing Status 2024 Income Phase-Out Range 2025 Income Phase-Out Range
Single or Head of Household $146,000–$161,000 $150,000–$165,000
Married, filing jointly $230,000–$240,000 $236,000–$246,000
Married, filing separately $0–$10,000 $0–$10,000

Source: IRS.

The Roth IRA phase-out range works similarly to the traditional IRA. If you earn below it, you can contribute the maximum amount; if you earn above it, you can’t contribute at all; and if you’re within the range, the amount you can contribute will fall between $0 and $7,000 or $8,000.

If you’re eligible to contribute to a Roth IRA, you absolutely should. It’s hard to overstate how beneficial having tax-free withdrawals in retirement can be.

The $22,924 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

View the “Social Security secrets” »

The Motley Fool has a disclosure policy.

Related Posts

Social Security is an essential piece to most American’s retirement plans. Without their monthly benefits, some 16.3 million seniors U.S, would be living below the

The average retirement age in the U.S. was 62 in 2023, but that number’s been slowly ticking up over time. Rising life expectancies and rising

While the stock market is still thriving, some investors may be feeling wary about the future. Spiking inflation could cause the Federal Reserve to shift

There are plenty of ways to become a millionaire, like starting a successful business, being a professional athlete, or becoming a movie star. For most