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2025 IRS Contribution Maximums

New 2025 IRS Contribution Maximums

November 01, 2024

Attention all savers and future retirees! The Internal Revenue Service (IRS) has just delivered an early holiday gift by announcing an increase in the amount you can stash away in your 401(k) plans for 2025.  At Leading Retirement Solutions we are here to assist you in making the most of this opportunity.

Retirement Plan Maximum Contributions:

401(k) contributions are one of the easiest and most cost-effective ways for employees to save for retirement. Each year, the IRS reviews and adjusts the maximum contributions that can be made to 401(k), 403(b), Cash Balance, and other types of retirement plans, more often increasing what owners and employees can contribute to a plan for retirement savings and tax deductions.

Contribution Highlights for 2025:

  • $23,500  -  The contribution maximum for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan.
  • $7,000 - The contribution maximum for employees who participate in IRAs. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment but remains $1,000 for 2025.
  • Employees aged 50+ can contribute up to $31,000 to most 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan, with a $7,500 catch-up limit. Those aged 60-63 have a higher catch-up limit of $11,250.
       
 

2025

2024

2023

401(k), 403(b), Profit-Sharing Plans, 457 etc.

Annual Compensation for Contributions

350,000

345,000

330,000

Elective Deferrals

23,500

23,000

22,500

Catch-up Contributions

7,500

7,500

7,500

Defined Contribution Maximum

70,000

69,000

66,000

ESOP Contribution Maximum

(Account balance/Lengthening determination)

1,415,000  
/280,000

1,380,000 
/275,000

1,330,000 
/265,000

Other

HCE Threshold

(Highly Compensated Employee)

160,000

155,000

150,000

Defined Benefit Maximum

280,000

275,000

265,000

Key Employee

230,000

220,000

215,000

Control Employee (board member or officer)   

140,000

135,000

130,000

Control Employee (compensation-based)

285,000

275,000

265,000

Taxable Wage Base

176,100

168,600

160,200

IRAs

IRA Contribution Maximum

7,000

7,000

6,500

IRA Catch-Up Contributions

1,000

1,000

1,000

Traditional IRA AGI Deduction Phase-out Starting at

Joint Return

126,000

123,000

116,000

Single or Head of Household

79,000

77,000

73,000

SEP IRA

SEP Minimum Compensation

750

750

750

SEP Maximum Contribution

70,000

69,000

66,000

SEP Maximum Compensation

350,000

345,000

330,000

SIMPLE IRA

SIMPLE Maximum Contributions 

16,500

16,000

15,500

SIMPLE Catch-up Contributions

3,500

3,500

3,500

Additional information can be found on the here.

2025 Social Security Cost of Living Adjustment (COLA) Rates

SSA announced an increase of 2.5 percent for Social Security payouts. The cost-of-living adjustment (COLA) will begin with benefits payable to nearly 68 million Social Security beneficiaries in January 2025. Increased payments to nearly 7.5 million SSI recipients will begin on December 31, 2024. (Note: some people receive both Social Security and SSI benefits)

These updates underscore the importance of planning for retirement and maximizing your contributions while you can. As we approach 2025, it's a perfect time to review your retirement strategy and make sure you're taking full advantage of these increased limits. Remember, every dollar you save today is a step toward a secure and comfortable retirement tomorrow. Schedule a personalized consultation with us or reach out directly at 206-430-5084 to start the conversation today.

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