IRAs and employer-sponsored retirement plans are subject to annual contribution limits set by the federal government. The limits are adjusted periodically to compensate for inflation and increases in the cost of living.
For tax year 2025, you can contribute up to $7,000 to all IRAs combined (the limit is adjusted annually for inflation) which is unchanged from 2024. If you have a traditional IRA as well as a Roth IRA, you can only contribute a total of the annual limit in one year, not the annual limit to each. If you are age 50 or older, you can also make a $1,000 annual “catch-up” contribution.
Employer-sponsored retirement plans such as 401(k)s and 403(b)s have a $23,500 contribution limit in 2025 (up from $23,000 in 2024); individuals aged 50 and older can contribute an extra $7,500 in 2025 as a catch-up contribution (unchanged from 2024). (Section 403(b) and 457(b) plans may also provide special catch-up opportunities.)
New for 2025, workers age 60 to 63 can make a larger "super catch-up" contribution of $11,250. Like all catch-up contributions, the age limit is based on age at the end of the year, so you are eligible to make the full $11,250 contribution if you will turn 60 to 63 any time during 2025, but not if you will turn 64.
You can contribute up to $16,500 to a SIMPLE IRA or SIMPLE 401(k) plan in 2025 (up from $16,000 in 2024). You can make an extra $3,500 catch-up contribution in 2025 if you are age 50 or older (unchanged from 2024) or an additional $5,250 for employees age 60 to 63. (Certain SIMPLE plans may have higher limits.)
Distributions from traditional IRAs and most employer-sponsored retirement plans are taxed as ordinary income, except for any after-tax contributions you've made, and the taxable portion may be subject to 10% federal tax penalty if taken prior to reaching age 59½ (unless an exception applies). If you participate in both a traditional IRA and an employer-sponsored plan, your IRA contributions may or may not be tax deductible, depending on your adjusted gross income.
The information in this newsletter is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek guidance from an independent tax or legal professional. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2025 Broadridge Financial Solutions, Inc.