Here’s your comprehensive guide on the 2025 IRA and Retirement Plan Contribution Limits: Insights & FAQs.
As you navigate the ever-changing landscape of retirement planning, staying updated on annual IRS adjustments is crucial for optimizing your financial future. This guide aims to provide you with the most current insights into 2025 contribution limits for various retirement accounts, as well as answers to frequently asked questions.
From traditional IRAs to 401(k)s, we have you covered, ensuring you make the most informed decisions for your golden years.
2025 Annual Contribution Limits Table
| Retirement Plan | 2025 Contribution Limit |
| Traditional/Roth/Self-Directed IRA | $7,000 ($8,000 for people 50+) |
| 401(k)/403(b) | $23,500 ($31,000 for people 50+/ $34,750 for people 60-63) |
| SIMPLE IRA | $16,500 ($3,500 catch-up for people 50+/ a catch-up the greater of $5,000 or 150% of the current catch-up rate for people 60-63)) |
| SEP IRA | $70,000 |
| 457(b) | $23,500 ($31,000 for people 50+/ $34750 for people 60-63) |
| HSA | $4,300 for Individuals/ 8,550 for Family Plans (+$1000 catch-up rate) |
2025 IRA Contribution Limits: Downloadable PDF
Why Are Contribution Limits Important?
Contribution limits restrict how much you can contribute to a retirement account each year. Since retirement accounts come with such alluring tax benefits, the IRS caps how much you can contribute to avoid losing excess money by protecting all of your assets in a retirement account.
For individuals and businesses, understanding the contribution limits of your specific retirement account will help you maximize your retirement planning. For SDIRA owners who are looking to invest in real estate in places as diverse as Lincoln, Salt Lake City, or Austin, knowing your contribution limits will help you determine how much capital you can raise via your SDIRA.
Why Do Contribution Limits Change Each Year?
The IRS calculates annual contributions for self-directed IRAs and all retirement accounts based on rising inflation rates.
This calculation is performed before the end of the previous tax year to give people a proper heads-up to start planning for next year’s contributions.
Based on CPI numbers, you can predict next year’s annual contribution limits based on the running inflation rate.
Why Are Increases Not As Big in 2025?
Fortunately for Americans, inflation cooled down significantly in 2024 when compared to the previous year.
As a result, annual contribution increases pegged to the CPI were much less than the previous year. For example, contribution limits for 401(k)s increased by $500 in 2025, as compared to a $2,000 increase in 2023.
IRAs have not increased at all, though they are expected to increase the following year.
What Are Catch-Up Contributions?
Catch-up contributions are extra incentives provided by the IRS to help individuals who are closer to retirement age reach their retirement goals.
These contributions are available to individuals 50 years or older and allow an additional $1,000 contribution for IRA holders who participate in an employee-sponsored 401(k), 401(b), or 457(b) plan.
Changes to Catch-Up Contributions Under SECURE 2.0
The landmark SECURE 2.0 Act included provisions that classified all catch-up contributions for individuals with a modified adjusted gross income (MAGI) over $145,000 as a Roth-style contribution. That means that all catch-up contributions for wealthy individuals in a 401(k) or 457(b) are taxed based on contributions but may be withdrawn tax-free. However, this provision was recently pushed back until 2026.
New provisions also allowed people between 60-63 years old to increase their catch-up contributions in 2025. These contributions will either be larger than $10,000 or a 50% increase over the standard catch-up contribution rate.
Read More: How to Maximize Catch-Up Contributions for Retirement.
Traditional IRA Contribution Limits
For the 2025 tax year, the IRS set the annual IRA contribution limit at $7,000 for investors under 50 years of age (the same as the previous year) with an additional catch-up rate of $1,000 for individuals 50 and older.
Roth IRA Contribution Limits
Multiple factors determine how much money you can contribute to your Roth IRA.
First, you must consider your Modified Adjusted Gross Income, also called MAGI. Additionally, you will need to consider your filing status. For instance, those who are married but file their taxes separately will have different contribution limits than those who are married and filing jointly.
If you are married and filing jointly, and your MAGI is $240,000 (an increase from $228,000 in 2023), you are not eligible for Roth IRA contributions. Meanwhile, if you are married and filing jointly with an income that falls between $230,000 and $239,999, you can make a partial contribution. For singles, the income limit in 2025 increases is $161,000.
All contribution limits are the same for Traditional IRAs, whether in a standard or self-directed format.
For more information about Roth IRAs, check out this article: Guide to Roth IRA Requirements: Income and Contribution Limits.
401(k) Contribution Limits
401(k)s are popular among employers because contributions can be matched, and they are eligible for tax deductions at the end of each tax season.
For the 2025 tax year, the IRS has set the annual 401(k) contribution limit at $23,500. This number is also the same for Individual 401(k)s.
As is the case with many other types of retirement accounts, special provisions are made for investors who are 50 years old or older. In addition, changes under the SECURE 2.0 Act have allowed individuals in the age range of 60-63 to contribute an additional $11,250 catch-up rate.
Since the employer matches most 401(k) contributions, there are also total contribution increases that both an employee and employer can contribute to an account that rose from $70,000 with an additional $7,500 catch-up rate or $11,250 for individuals 60-63.
SEP IRA Contribution Limits
SEP IRAs are fully run by your employer, as they get to decide how much money they will contribute to your plan each year.
It’s important to note that SEP IRAs come with their own set of contribution limits.
According to IRS guidelines, employers who set up a SEP IRA for their employees cannot exceed more than 25% of the employee’s annual compensation. In addition, the maximum contribution to a SEP IRA is $70,000.
It’s equally important to note that elective salary deferrals and catch-up contributions are not allowed in SEP IRAs.
SIMPLE IRA Contribution Limits
SIMPLE (Savings Incentive Match Plan for Employees) IRAs have lower contribution limits than traditional 401(k)s. However, these remain popular among investors because they allow employees to participate in multiple retirement plans.
For investors under the age of 50, the annual contribution limit of a SIMPLE IRA is $16,500. However, much like some of the other account types that we have discussed, special provisions are made for employees who are 50 or older, as they are allowed to invest up to $20,000 in their SIMPLE IRA.
Understanding your annual contribution limits for each type of retirement account will allow you to pick one that best meets your financial goals and complete successful retirement planning. If you have any questions about your retirement plan and your annual contribution limits, contact a specialist at Horizon Trust.
