Retirement Contribution Limits for 2024 and 2025

Funneling money into a tax-advantaged account, such as an IRA or a 401(k) is vital if you’re banking on enjoying a comfortable retirement. These kinds of accounts offer a much higher potential rate of growth compared to a regular savings account. However, there’s a catch when it comes to how much you can save each year. The IRS routinely adjusts the annual retirement contribution limits for qualified retirement accounts. A financial advisor can help create a retirement strategy for your needs. Here are the latest contribution limits for the 2024 and 2025 tax years.

Contribution Limits for Employer-Sponsored Plans

Retirement plans offered through your employer can either be defined benefit plans, such as a pension, or defined contribution plans, like a 403(b), 457 or 401(k) plan. If you’re enrolled in any of the above, you can defer up to $23,500 of your salary into your account in 2025, up from $23,000 in 2024. The maximum 401(k) contribution limit also applies to federal employees who participate in the Thrift Savings Plan. This cap doesn’t include employer matching contributions.

Although your company match is not included in maximum 401(k) contribution limits, the IRS does cap the total sum of your contributions and your employer’s contributions. For 2025, the cap is the lesser of either 100% of employee compensation or $70,000. For 2024, the cap was the lesser of either 100% of employee compensation or $69,000. Note that these caps don’t include catch-up contributions, which can be up to $7,500 for those 50 or older.

Also of note starting in 2025: Per a change made in the SECURE 2.0 Act, a special “super catch-up contribution” is available to employees aged 60, 61, 62 and 63. The limit for employees in this age range is $11,250 instead of $7,500.

Defined benefit plans pay you a set amount of money once you retire based on your annual salary and how many years of service you’ve racked up. Because of the cost involved, fewer companies offer defined benefit plans than once before.

Contribution Limits for Self-Employed Savers

An advisor and client discussing retirement contribution limits.

When you own a business or you work as an independent contractor, you have to think outside the box a little in terms of how you can save for retirement. Two of the most common options available are SEP and SIMPLE IRAs. Which one you choose depends on your business structure and whether you have any employees, but generally, both plans offer more benefits than you’d get with a traditional IRA.

For 2025, employers can contribute up to 25% of an employee’s salary to a SEP IRA for them or up to $70,000, whichever is less. That cap is up from $69,000 in 2024. Meanwhile, the contribution limit for SIMPLE IRAs in 2025 is $16,500, plus a catch-up contribution of $3,500 for those 50 and older. For 2024, you could contribute a maximum of $16,000 to a SIMPLE IRA.

If you own a sole proprietorship or your only employee is your spouse, a solo 401(k) may also be a good choice. The 2024 and 2025 contribution limits are the same as a SEP IRA, and your contributions grow on a tax-deferred basis.

Limits for Traditional and Roth IRAs

An IRA is an excellent choice for supplementing the amount you’re saving in an employer’s plan or building your nest egg when you’re not eligible to participate in a retirement plan at work.

With a traditional IRA, you get the benefit of deferring taxes on earnings and your contributions may be deductible. You fund a Roth IRA with after-tax dollars, which means you’ll pay no tax on qualified withdrawals. For both 2024 and 2025 tax years, the most you can put into either a traditional IRA or Roth IRA is $7,000, plus a $1,000 catch-up contribution if you’re 50 or over.

Catch-Up Contribution Limits

In terms of saving for retirement, you’re better off starting sooner rather than later. However, the IRS recognizes that some people may put it off longer than others. In addition to regular contributions, certain savers can make catch-up contributions to boost their balances. The permitted amount of the catch-up contribution varies based on what kind of retirement account you have.

For defined contribution plans, such as a 401(k), you can chip in an extra $7,500 in both 2024 and 2025 if you’re 50 or older. You can’t make catch-up contributions to a SEP IRA, but you can squirrel away an additional $3,500 to a SIMPLE plan if you’re 50 or older (up from $3,000 in 2023). If you’ve got a solo 401(k), the catch-up limit is $7,500.

Starting in 2025, people between 60 and 63 years old with a 401(k) or similar plan can save up to $10,000 or 150% of the standard catch-up contribution limit for that year, whichever is greater.

Income Phase-Out Limits

Your ability to deduct your traditional IRA contributions depends on how much you earn.

If you have a traditional IRA and you participate in your employer’s retirement plan in 2025, the deduction phases out if you’re single and your modified adjusted gross income (MAGI) is between $79,000 and $89,000 (up from $77,000 to $87,000 in 2024).

If you’re married, file jointly and are covered by a workplace retirement plan, the deduction phases out when your MAGI ranges between $126,000 and $146,000 (up from $123,000 to $143,000 in 2024).

And if you’re not covered by a workplace retirement plan, but your spouse is, your deduction phases out if your MAGI is between $236,000 and $246,000 in 2025 (up from $230,000 to $240,000 in 2024).

Savers who are planning to fund a Roth IRA also need to be aware of adjustments to the income cap. In 2025, income phase-outs apply if you’re single or the head of your household with a MAGI between $150,000 and $165,000. The income phase-out applies to married couples filing jointly with a MAGI between $236,000 and $246,000.

For 2024, income phase-outs apply if you’re single or the head of your household with a MAGI between $146,000 and $161,000. The income phase-out applies to married couples filing jointly with a MAGI between $230,000 and $240,000.

Scoring the Saver’s Credit

As an incentive to get more people to save for retirement, the IRS offers a special credit for people who make below a certain amount and contribute to an employer’s plan or IRA. This is known as the Saver’s Credit.

In 2024, the credit is worth 50% of your contribution at the following income levels: single filers with AGI of up to $23,000, heads of household with AGI of up to $34,500 and married couples who file a joint return with AGI of up to $46,000.

In 2025, the credit is projected to be worth 50% of your contribution at the following income levels: single filers with AGI of up to $23,750, heads of households with AGI of up to $35,625 and married couples who file a joint return with AGI of up to $47,500 or less.

Tips for Saving for Retirement

A financial advisor can help you prepare for retirement and set savings goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Maximize your employer’s 401(k) match, if one is offered. As illustrated by SmartAsset’s 401(k) calculator, employer contributions can seriously boost the value of your 401(k) over time.
As indicated by the many contribution limits, you have numerous choices when it comes to saving for retirement. Do your research to make sure you’re making the best choice for your needs. Here’s a breakdown of IRAs vs. 401(k)s.
If you’re over the age of 50, take advantage of catch-up contributions. Catch-up contributions are a great way to boost your savings, whether you got a late start or haven’t saved as much as you’d hoped. Use SmartAsset’s retirement calculator to ensure you’re saving enough to retire comfortably.