While there are no major changes to the tax code for 2025, there are adjustments to contribution limits that you may want to take advantage of. Along with those adjustments are a few more significant changes due to portions of the Secure Act 2.0 that become effective in 2025. This is not meant to be an exhaustive list, but we’ve made an effort to summarize a few updates that may be most likely to impact you.
Retirement Plan Contributions – The maximum elective deferral limit for 401k and 403b plans increased by $500 to $23,500. If you are making a maximum contribution, make sure you adjust your amount for the new limit. Even if you are not currently reaching the maximum limit, consider increasing your contribution amount. Small annual increases can have a significant impact on your future retirement savings!
- Catch-up Contributions – If you are over age 50, you are eligible to make additional catch-up contributions of $7,500 to your 401k or 403b.
- Super Catch-up Contributions – New for 2025, thanks to the Secure Act 2.0. If you reach the ages of 60-63 in 2025, your catch-up contribution limit is increased to $11,500.
HSA Contribution Limit – $4,300 for an individual, and $8,550 for a family. You are also allowed a catch-up contribution of $1,000 if you are 55 or older in 2025. Hint – HSA’s can be a great way to save for medical (and other) expenses in retirement. They offer a unique triple tax advantage – funds go in pre-tax, grow tax-deferred, and come out tax-free if used for qualifying expenses. Did you know that you can invest funds in your HSA? Give us a call if you would like to learn more about that.
IRA Contribution Limit – No change for 2025. $7,000 contribution limit, with a $1,000 catch-up contribution if you are 50 or older in 2025.