Each year, the IRS reviews and adjusts contribution limits for retirement accounts such as IRAs and 401(k)s to account for inflation and other economic factors. These adjustments are essential for individuals aiming to maximize their tax-advantaged retirement savings.
For 2025, several key updates have been implemented:
- 401(k) Plans: The employee contribution limit has increased from $23,000 in 2024 to $23,500 in 2025. Additionally, a new provision allows individuals aged 60 to 63 to make “super catch-up” contributions of up to $11,250, significantly higher than the standard $7,500 catch-up contribution for those aged 50 and above.
- IRAs: The contribution limit for both Traditional and Roth IRAs remains unchanged at $7,000 for 2025. The catch-up contribution for individuals aged 50 and above also remains at $1,000.
Understanding these updates is crucial for optimizing your retirement strategy. Below, we delve deeper into the specifics of each account type and how you can leverage these changes to enhance your retirement savings.
What are the 2025 retirement account contribution limits?
| Account Type | 2025 Contribution Limit | 2024 Contribution Limit | 2025 Catch-up Contribution Limit (> age 50) | 2024 Catch-up Contribution Limit (> age 50) |
| Traditional IRA | $7,000 | $7,000 | $1,000 | $1,000 |
| Roth IRA | $7,000 | $7,000 | $1,000 | $1,000 |
| 401(k) | $23,500 | $23,000 | $7,500 | $7,500 |
| SIMPLE IRA | $16,500 | $16,000 | $3,500 | $3,500 |
| 403(b) | $23,500 | $23,000 | $7,500 | $7,500 |
| 457(b) | $23,500 | $23,000 | $7,500 | $7,500 |
| TSP | $23,500 | $23,000 | N/A | N/A |
| HSA | $4,300 (individual) $8,550 (family) |
$4,150 (individual) $8,300 (family) |
$1,000 | $1,000 |
Types of retirement accounts
Traditional IRAs
A Traditional IRA is a retirement savings account in which pre-tax dollars are invested. Because it’s pre-tax, any money invested into a Traditional IRA is not taxed today, thereby lowering your income (and today’s income taxes, too). However, any money you withdraw during retirement will be subject to income taxes.
Anyone can invest in a Traditional IRA, regardless of employment status or income. This makes Traditional IRAs the most accessible retirement savings vehicle available.
Roth IRAs
Instead of investing pre-tax dollars toward retirement, Roth IRAs allow you to invest after-tax dollars. The difference is that by paying taxes on contributions today, savings you withdraw in retirement are completely tax-free. But unlike Traditional IRAs, not everyone can invest in a Roth IRA as the retirement account is limited by income.
For instance, in 2023, the income limits for the full Roth IRA contribution were $138,000 and $218,000 for individual and joint filers, respectively. These income limits are now changing to $146,000 and $230,000 for 2023.
2025 Traditional and Roth IRA contribution limits key takeaways:
- 2025 Traditional & Roth IRA contribution limit: $7,000
- Catch-up contribution (50+): $1,000
- Total contribution limit (50+): $8,000
- Note: The IRS does not consider Traditional and Roth IRA contributions separately
- You can contribute a total of $7,000 ($8,000 if aged 50+) across any number of Traditional and Roth IRA accounts
- You cannot contribute $7,000 to each IRA you own
Income limits for 2025 Roth IRA contributions
Roth IRAs come with income restrictions that determine eligibility to contribute the full amount. The income phase-out ranges for 2025 are:
- Single Filers: $146,000 – $161,000
- Married Filing Jointly: $230,000 – $240,000
- If your income exceeds these limits, you may not be able to contribute to a Roth IRA directly
- However, you can still explore the backdoor Roth IRA strategy
401(k), 403(b) and 457 retirement plans
As an employer-sponsored retirement account, 401(k)s are managed and controlled by your employer. Your employer may offer a Traditional 401(k) option, a Roth 401(k) option, or both.
Generally, a 401(k) plan allows you to choose investments from a pre-selected list set by your employer. A benefit of a 401(k) is that your employer may contribute additional funds toward your balance, which is essentially “free” money for retirement.
2025 401(k), 403(b) and 457 contribution limits key takeaways:
- Contributions limits in place at both employee and employer levels
- Note the new super catch-up contribution available exclusively to workers aged 60-63
- Employee contribution limit: $23,500
- Catch-up contribution for workers aged 50+: +$7,500
- Total employee contribution limit : $31,000
- [New for 2025] Super catch-up contribution (ages 60-63): +$11,250
- Total employee contribution with super catch-up: $42,250
- Catch-up contribution for workers aged 50+: +$7,500
- Employer + employee combined contribution limit: $69,000
- With catch-up (50+): $76,500
- With super catch-up (workers aged 60-63): $111,250
SIMPLE IRAs
A SIMPLE IRA — short for Savings Incentive Match Plan for Employees — is a retirement plan for smaller employers. SIMPLE IRAs have lower costs and expenses than 401(k)s, while allowing for higher contribution limits than Traditional IRAs. This type of retirement account is most often found among small businesses.
SIMPLE IRA 2025 contribution limits:
- Employee contribution limit: $16,500 (up from $16,000 in 2024)
- Catch-up contribution (50+): $3,850
- New for 2025, a super catch-up contribution for workers aged 60-63: $5,250
SEP IRAs
In a Simplified Employee Pension (SEP) IRA, an employer contributes funds directly to their employees’ IRA plans. Most often, SEP IRAs are used by self-employed individuals who can increase their IRA contribution limits through the retirement account.
SEP IRA 2025 contribution limits:
- The smaller of:
- 25% of eligible employee’s compensation
- $70,000
403(b)s
403(b)s are similar to 401(k)s for nonprofit organizations and public school systems. 403(b)s have identical contribution limits and restrictions as 401(k)s and some added benefits like shorter vesting periods for contributions and an exemption from nondiscrimination testing (a test to ensure an employee-sponsored retirement program doesn’t unfairly favor highly-compensated employees and owners).
457(b)s
Employees of state and local governments have their own type of retirement account known as a 457(b). A 457(b) account is similar to a Traditional IRA in that it allows for pre-tax contributions.
Thrift Savings Plans (TSPs)
A Thrift Savings Plan (TSP) is a type of retirement account restricted to members of the armed forces and employees of the federal government. TSPs are the most limited type of retirement account, with only six funds available for investment. However, TSPs are very beneficial as they have high contribution limits and no income restrictions.
HSAs
Another way to save money on taxes is through a Health Savings Account (HSA). You can deposit money into an HSA to pay for qualified medical expenses. This money is deposited pre-tax, and therefore exempt from federal taxes.
However, HSAs are only available for those who have high-deductible health insurance plans: $4,150 for an individual or $8,300 for those with family coverage.
What does this mean for cryptocurrency investments?
Staying informed about annual adjustments to retirement account contribution limits is vital for effective financial planning. The 2025 updates, including the increased 401(k) contribution limits and the introduction of “super catch-up” contributions for those aged 60 to 63, present valuable opportunities to bolster your retirement savings.
If you’re considering diversifying your retirement portfolio beyond traditional assets, exploring options like a self-directed IRA can provide access to alternative investments, including precious metals and other assets. A well-rounded and informed approach to retirement planning can help ensure financial security in your later years.
For personalized guidance on maximizing your contributions and exploring diverse investment avenues, feel free to contact us. If a Digital IRA is right for you, then BitIRA is here to assist you in navigating the complexities of retirement planning and achieving your financial goals.