As we approach 2025, several significant changes are set to impact retirement savings plans, offering you and your employees new opportunities to enhance your financial future. Here’s a summary of the key changes to be aware of:
Increased Contribution Limits
In 2025, workers aiming to maximize their retirement savings can look forward to an increase in the maximum tax-deductible contribution limit. The individual contribution cap for 401(k) plans is rising from $23,000 in 2024 to $23,500. While only a small percentage of participants hit this limit, those who do can benefit from greater tax savings and increased retirement funds.
Accelerated Catch-Up Contributions
For workers aged 60 to 63, the SECURE Act 2.0 introduces an exciting opportunity to accelerate retirement savings. This new rule allows these individuals to make additional catch-up contributions of $11,250, bringing the total potential 401(k) contribution to $34,750 in 2025. For workers aged 50-59 the catch-up contribution remained the same at $7,500. While only about 15% of eligible employees currently take advantage of catch-up contributions, this change could provide a substantial boost for those nearing retirement with concerns about their investment levels.
Automatic Enrollment for New Plans
Starting in 2025, businesses launching new 401(k) or 403(b) plans will be required to automatically enroll employees at a contribution rate between 3% and 10% of their compensation, with an annual increase of 1% until reaching at least 10% but no more than 15%.
Raised Income Limits for the Saver's Credit
Lastly, the income thresholds for claiming the Saver's Credit are set to rise in 2025. The new limits are $79,000 for married couples filing jointly, $59,250 for heads-of-household, and $39,500 for single filers. The Saver's Credit provides a valuable tax credit of 10%, 20%, or 50% of contributions to eligible retirement plans, up to $1,000 for singles and $2,000 for joint filers. The increased income limits mean more taxpayers can take advantage of this beneficial credit.
Start Saving Today
Take advantage of this year’s changes to maximize your retirement benefits and support your employees. For personalized guidance and assistance in navigating these changes, schedule a personalized consultation with us or reach out directly at 206-430-5084 to start the conversation today. Our experts will help you develop a comprehensive retirement strategy tailored to your unique financial situation.
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