IRS 2025 Retirement Plan Contribution Limits
The IRS has released the 2025 inflation-adjusted contribution limits for retirement plans in Notice 2024-80. While many retirement plan limits will see increases, the adjustments are smaller compared to previous years. As a result, your ability to boost retirement savings may be more restricted, depending on the type of plan you have.
* A change that takes effect in 2025 under SECURE 2.0
Your MAGI may reduce or even eliminate your ability to take advantage of IRAs. Fortunately, IRA-related MAGI phaseout range limits all will increase for 2025:
Traditional IRAs
MAGI phaseout ranges apply to the deductibility of contributions if a taxpayer (or his or her spouse) participates in an employer-sponsored retirement plan:
For married taxpayers filing jointly, the phaseout range is specific to each spouse based on whether he or she is a participant in an employer-sponsored plan:
For a spouse who participates, the 2025 phaseout range limits will increase by $3,000, to $126,000–$146,000.
For a spouse who doesn’t participate, the 2025 phaseout range limits will increase by $6,000, to $236,000–$246,000.
For single and head-of-household taxpayers participating in an employer-sponsored plan, the 2025 phaseout range limits will increase by $2,000, to $79,000–$89,000.
Taxpayers with MAGIs in the applicable range can deduct a partial contribution; those with MAGIs exceeding the applicable range can’t deduct any IRA contribution.
But a taxpayer whose deduction is reduced or eliminated can make nondeductible traditional IRA contributions. The $7,000 contribution limit for 2025 (plus $1,000 catch-up, if applicable, and reduced by any Roth IRA contributions) still applies. Nondeductible traditional IRA contributions may also be beneficial if your MAGI is too high for you to contribute (or fully contribute) to a Roth IRA.
Roth IRAs
Whether you participate in an employer-sponsored plan doesn’t affect your ability to contribute to a Roth IRA, but MAGI limits may reduce or eliminate your ability to contribute:
For married taxpayers filing jointly, the 2025 phaseout range limits will increase by $6,000, to $236,000–$246,000.
For single and head-of-household taxpayers, the 2025 phaseout range limits will increase by $4,000, to $150,000–$165,000.
You can make a partial contribution if your MAGI falls within the applicable range, but no contribution if it exceeds the top of the range.
(Note: Married taxpayers filing separately are subject to much lower phaseout ranges for traditional and Roth IRAs.)
Backdoor Roth IRA
If you qualify for making an IRA contribution but have too much income to contribute to a Roth IRA directly, it may be advisable to use a Backdoor Roth IRA strategy.
Contribute to a traditional IRA
Immediately convert it to a Roth IRA
This strategy only works if you don’t have any other traditional IRA’s. If you have other traditional IRA’s, then the conversion to Roth will be a taxable event. If you don’t have other traditional IRA’s, the conversion to Roth is tax free and you get your investment in a tax free Roth environment. Consult your tax advisor for more details.
Optimize Your Retirement Strategy
To keep your retirement plans on track, it's important to consider the 2025 inflation-adjusted contribution limits. Let CSH assist you in reviewing your plans and making any needed adjustments. Proactive planning now can help you maximize your savings and stay on course toward your long-term financial goals. Don’t wait—secure your future today.
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