Maximize Your Retirement Savings In 2025: New Limits And Strategies

Jan 31

By Nicole Norris

The start of a new year is a perfect time to review your current financial picture! It’s also important to be aware of any regulatory changes that may affect your retirement savings options. Below, I’ve outlined the 2025 contribution limit changes announced by the IRS and provided some information about savings and investment options outside of traditional workplace plans.

401(k), 403(b), 457, and Thrift Savings Plans

Annual contribution limit: Increased to $23,500 (up from $23,000 in 2024).
Catch-up contributions for those aged 50 and over: Remains $7,500.
Higher catch-up limit for those aged 60-63: Increased to $11,250 (up from $7,500).

IRAs

Contribution and catch-up contribution limits: Remain the same.
Phase-out ranges for deductions and eligibility for Roth IRA contributions and Saver’s Credit have increased marginally (see IRS Notice 2024-80 for new amounts).

SIMPLE Retirement Plans

Contribution limit: Increased to $16,500 (up from $16,000).
Catch-up contributions: Remains $3,500 for those aged 50 and over (increases to $3,850 for certain SIMPLE plans).
Higher catch-up limit for ages 60-63: $5,250 (up from $3,500).

The most notable change this year is the increased contribution limits for employees aged 60-63 in workplace retirement plans. If you are saving for retirement but don’t have access to a workplace plan, there are other excellent investment opportunities available to you.

Brokerage Accounts

Funded with after-tax money and offers several advantages:

No contribution limits.
Access to funds at any time without penalty. This is especially useful if early retirement is a possibility for you.
Earnings are taxed at the capital gains rate.

Roth IRA Options

Roth contributions: You may be able to contribute to a Roth IRA even if you exceed the income limits. A “backdoor Roth” is a conversion strategy that requires one additional step but allows investors to take advantage of the Roth IRA's benefits.

Roth conversions: Some investors utilize Roth conversions as part of their strategy. This allows an individual to convert all or part of their Traditional IRA funds to a Roth IRA by paying income tax on those dollars now.

Retirement Plans for Self-Employed Individuals

If you're self-employed, you can set up a retirement plan that will allow you to contribute more than a Traditional IRA. A few options for self-employed individuals include the Solo 401(k), SEP IRA, and SIMPLE IRA.

All these options have tax implications to consider. To determine if any of these strategies are right for you, we recommend consulting with a financial advisor.

We would love to meet with you! At Asset Strategies, it’s our joy to serve clients as both educators and guides. Schedule a complimentary consultation with Nicole Norris, Financial Advisor with Asset Strategies, by calling (402) 489-9618 or visit us online at assetstrategies-ne.com.

Securities offered through Western International Securities, Inc., Members FINRA and SIPC. Asset Strategies and Western International Securities, Inc. are separate and unaffiliated entities.