IRS Retirement Plan Contribution Limits

Key Updates for Retirement Planning

IRS 2025 Retirement Plan Contribution Limits

he IRS has revealed the updated 2025 contribution limits for employer-sponsored retirement plans, including 401(k), 403(b), and 457 plans, reflecting adjustments for inflation and cost of living increases. The new limit for combined traditional (pre-tax) and Roth (after-tax) contributions is $23,500. This increase enhances retirement savings capacity and potentially reduces tax liabilities.

Comparison of Traditional vs. Roth

Options Based on Tax

Traditional Contributions

Roth Contributions

Pre-tax dollars
This lowers your taxable income for the year, potentially reducing your tax bill.
Yes  
After-tax dollars
This has no effect on current adjusted gross income.   
  Yes

Withdrawals taxed as ordinary income in retirement    

Taxes will be owed on your contributions and earnings when you withdrawal.

Yes  

Qualified withdrawals are not taxed 

Withdrawals are tax-free, both contributions and earnings .

  Yes
Pre-tax employer contributions Yes Yes

 

Catch-up Contributions for Participants Over Age 50

Participants aged 50 and older have the additional benefit of catch-up contributions available to them. Catch-up contributions allow individuals to contribute beyond the standard contribution limit in order to accelerate retirement savings.

  • Individuals over 50 can contribute an additional $7,500 in 2025, bringing the total possible contribution to $31,000 for the year.
  • Under the SECURE 2.0 Act rule, individuals who attain the ages of 60, 61, 62, or 63 in 2025 are eligible to contribute an additional $11,250. This is a notable increase compared to the standard $7,500 catch-up contribution and is designed to help individuals from age 60 to 63 to save more aggressively as retirement approaches.

The new 2025 catch-up contribution limits provide a valuable chance for individuals to accelerate retirement savings as they approach retirement. Regularly evaluating your retirement contributions and making necessary adjustments helps ensure you are on the right path to meet your retirement goals.

Accessing your Retirement Account

You can access your retirement account by visiting www.go-retire.com or by downloading the Go-Retire app on your mobile device. If this is your first time logging in, your username will be your Social Security Number without any dashes or spaces, and your password will be your date of birth formatted as MMDDYYYY. For those who have logged in before, use the username and password that you previously created.

Our team at First Citizens Wealth Management is here to help if you have questions about maximizing your retirement plan contributions. 

Source: IRS Notice 2024-80 (Nov. 1, 2024); IRS News Release IR-2024-285 (Nov. 1, 2024)

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