2025 Retirement Contribution Limits

As 2025 approaches, key cost-of-living adjustments (COLAs) for retirement savings plans and Health Savings Accounts (HSAs) will impact how individuals and employers maximize their contributions. These updates, effective for years beginning after December 31, 2024, provide the opportunity to optimize retirement and healthcare savings strategies.

For traditional and Roth IRAs, the contribution limit for 2025 remains at $7,000, with an additional $1,000 catch-up contribution for individuals aged 50 or older.

• Contribution Maximum: Contributions to SEP IRAs, profit-sharing plans, and money purchase plans have increased to a maximum of $70,000.
• Compensation Cap: The maximum compensation considered for these contributions is now $350,000.
• With the contribution limit remaining at 25% of eligible compensation, individuals may qualify for the full $70,000.

• SIMPLE IRAs:
  • Maximum salary deferral has risen to $16,500.
  • Individuals aged 50 or older can contribute an additional $3,500, while those aged 60–63 are eligible for a $5,250 catch-up contribution.
  • Employers with fewer than 25 employees allow slightly higher contributions of $17,600, with a catch-up of $3,850 for those 50 or older.
• 401(k), 403(b), and 457(b) Plans:
  • The salary deferral limit is now $23,500, with the traditional catch-up contribution for those 50 or older remaining at $7,500.
  • Individuals aged 60–63 can contribute an additional $11,250.

401(k) Plan Limits for Plan Year:

Non-401(k) Related Limits:

Employers can consider up to $350,000 of an employee’s compensation when calculating contributions to qualified plans. For instance, if an employer contributes 10% of compensation, an employee earning $355,000 would receive a maximum contribution of $35,000 (10% of $350,000).

The HCE threshold, which determines eligibility for certain plan testing, has increased to $160,000.

The annual benefit limit for defined benefit plans has risen to $280,000, providing greater flexibility for high-income earners planning for retirement.

HSA contribution limits for 2025 will also see inflation-adjusted increases. These accounts remain a tax-efficient way to save for healthcare costs. The 2025 inflation adjusted indexed numbers for Health Savings Accounts (HSAs) are:

• SEP IRAs: The income threshold for employee eligibility remains at $750.
• SIMPLE IRAs: The income threshold for eligibility is unchanged at $5,000.

These COLA updates underscore the importance of proactive retirement and healthcare planning. Whether you’re an employee looking to maximize contributions or an employer designing benefits packages, these adjustments provide enhanced opportunities to save for the future.

To learn more, click here to view our document on 2025 Retirement Contribution limits. 

For personalized strategies to take advantage of these updates, consult with an Oppenheimer financial professional to ensure your retirement and healthcare savings align with your goals. Find one in your area here.