Trump donor Norm Champ explains how Biden-Harris regulations hurt America’s retirement funds in ‘The Bottom Line’.
It’s officially 2025 and a good time to re-evaluate your retirement planning.
the Internal Revenue Service (IRS), In November, it announced it had increased the amount individuals can contribute to their 401(k) and other retirement plans to account for inflation.
Each year, the IRS reviews the tax thresholds and limits for various retirement accounts and considers making a cost-of-living adjustment based on the impact of inflation since the previous change occurred.
For tax year 2025, the IRS is increasing the annual contribution limit for 401(k) plans. by $500 from the current limit of $23,000 in 2024 to $23,500 in 2025.
These limits also apply to many other retirement plans and will be subject to the same increase for tax year 2025, including 403(b) retirement plans, 457 plans, and the federal government’s Thrift Savings Plan.
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The IRS has raised contribution limits and catch-up contribution thresholds for 401(k) plans and similar retirement accounts. (Reuters / Reuters Photos)
The IRS is also considering adjustments to contribution limits for individual retirement accounts (IRAs), including: Traditional and Roth IRAs. However, the IRS will hold annual IRA contribution limits constant from 2024 to 2025 at $7,000. It also maintains the maximum catch-up IRA contribution for individuals age 50 and over at $1,000 for 2025.
Catch-up contribution limit that applies to employees age 50 and older who are enrolled in most 401(k), 403(b), government 457 plans, and Thrift savings plan It will remain at $7,500 for 2025. Workers 50 and older can generally contribute up to $31,000 annually to those retirement plans starting in 2025 under changes made with the enactment of the SECURE 2.0 Act of 2022.
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This law also created a catch-up contribution cap for workers ages 60 to 63 who participate in those plans — which will be increased to $11,250 from $7,500 in 2025.
The IRS also adjusted the limits under which taxpayers can contribute to a traditional IRA and receive… Tax deduction For their contribution.
The IRS has kept IRA contribution limits constant, but has increased the deduction phaseout scope for traditional IRAs and the contribution phaseout scope for Roth IRAs. (J. David Ackie/Getty Images/Getty Images)
For individual taxpayers who are also covered by a workplace retirement plan, the phase-out range for the traditional IRA contribution tax deduction is increased to between $79,000 and $89,000 — from $77,000 and $87,000. For married couples filing joint tax returns, the phase-out range rises to between $126,000 and $146,000, an increase of $3,000 from last year.
The income phaseout range for taxpayers who contribute to a Roth IRA increased to between $150,000 and $165,000 for individuals and heads of household — from between $146,000 and $161,000. For married couples filing jointly, the phase-out range increases by $6,000 to between $236,000 and $246,000.
The IRS reviews and updates the contribution and eligibility limits for retirement accounts such as 401(k) accounts and IRAs each year to adjust for inflation. (iStock/iStock)
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the Savings creditalso known as the Retirement Savings Contributions Credit, for low- and moderate-income workers is $39,500 for individuals, $79,000 for married couples filing jointly and $59,250 for heads of household.
This article was originally published on November 1, 2024.
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