IRS Announces 2025 Retirement Plan Dollar Limits and Thresholds
The IRS has released the 2025 retirement plan dollar limits and thresholds, reflecting cost-of-living adjustments. These updates impact various retirement savings options, including 401(k) plans, SIMPLE IRAs, and more. Below is a breakdown of the most significant changes.
Key 2025 Limits and Adjustments
- Annual Additions Limit
The contribution limit for 401(k) and other defined contribution plans increases to $70,000 (up from $69,000). - Compensation Limit
The maximum compensation considered for contributions and deductions rises to $350,000 (up from $345,000). - Elective Deferrals
401(k), 403(b), and 457 plans: $23,500 (up from $23,000).
SIMPLE plans and SIMPLE IRAs: $16,500 (up from $16,000). - Catch-Up Contributions
Individuals aged 50 and older (excluding those aged 60–63): $7,500.
Individuals aged 60–63: $11,250.
Roth contributions requirement threshold: $145,000. - Highly Compensated Employees (HCE)
The threshold for identifying HCEs increases to $160,000 (up from $155,000). - Key Employees
The compensation threshold for defining “key employees” under top-heavy rules increases to $230,000 (up from $220,000). - Saver’s Tax Credit
Income limits for the retirement savings contributions credit are as follows:
Married filing jointly: $79,000 (up from $76,500)
Head of household: $59,250 (up from $57,375)
Single filers: $39,500 (up from $38,250) - Control Employees
Officers: $140,000 (up from $135,000).
Other employees: $285,000 (up from $275,000).
Additional Information
The Social Security Administration has separately announced an increase in the taxable wage base for 2025. While not part of the IRS update, this change may affect how certain benefit calculations are handled—particularly those related to Social Security withholding and coordination with employer-sponsored retirement plans.
If you’re reviewing your current tax situation or retirement contributions in light of these updates, it may also be a good time to revisit any unfiled tax returns, IRS notices, or back taxes that could interfere with your overall tax strategy. These adjustments can intersect with a wide range of issues—especially for those navigating tax planning, IRS collection actions, or complex matters involving wage garnishment, tax audits, or penalty abatement.
Please feel free to contact Delia Law for a free consultation if you have any tax related questions.
