New IRA Contribution Limits Take Effect

The IRS announced updated contribution limits for retirement accounts, offering slightly higher ceilings for 2025 tax-advantaged savings.

What’s Changed

Traditional and Roth IRA contribution limits increased to $7,000 for those under 50. The catch-up contribution for those 50 and older remains at $1,000, allowing total contributions of $8,000 annually.

401(k) contribution limits rose to $23,500, with the catch-up contribution at $7,500 for older workers. This means someone over 50 can defer up to $31,000 through their employer plan.

Planning Considerations

If you’re not already maxing out contributions, consider increasing your deferrals to take advantage of these higher limits. Even small increases compound significantly over time.

Review your payroll deductions and IRA contributions early in the year to ensure you’re on track to maximize these tax-advantaged opportunities.