Trump donor Norm Champ explains how the Biden-Harris regulations hurt Americans' retirement budgets.
It's officially 2025, and it's a good time to reevaluate your retirement planning.
this Internal Revenue Service (IRS) In November, it announced it increased the amount people can contribute to their 401(k) and other retirement plans to account for inflation.
Each year, the IRS reviews the tax thresholds and limits for various retirement accounts and considers cost-of-living adjustments based on the impact of inflation since the previous change.
For the 2025 tax year, the IRS will increase the annual contribution limit 401(k) plans. $500 from the current limit of $23,000 in 2024 to $23,500 in 2025.
These limits also apply to several other retirement plans and will increase for the 2025 tax year, including 403(b) retirement plans, state 457 plans and the federal government savings plan.
IRS Sets New Tax Brackets, Increases Standard Deduction for 2025
The IRS increased contribution limits and contribution thresholds for 401(k) plans and similar retirement accounts. (Reuters photo / Reuters)
The IRS also makes adjustments to contribution limits for Individual Retirement Accounts (IRAs), including: Traditional and Roth IRAs. However, the IRS will keep the annual IRA contribution limit constant at $7,000 from 2024 to 2025. It also maintains the IRA contribution limit for people age 50 and older at $1,000 for 2025.
Compensatory contribution limits that apply to employees age 50 and older in most 401(k), 403(b), government 457 and Thrift savings plan For 2025, $7,500 will remain. Workers age 50 and older can typically contribute up to $31,000 a year to retirement plans starting in 2025, under changes implemented with the passage of the SECURE 2.0 Act in 2022.
IRS YELLEN TOUTS IMPLEMENTATION TO HELP CLOSE THE DEFICIT
The law also established a higher contribution limit for workers ages 60 to 63 participating in these plans — which will rise to $11,250 in 2025, from $7,500.
The IRS also set thresholds under which taxpayers can contribute to and withdraw from a traditional IRA. tax deduction For their share
The IRS kept the contribution limits for IRAs the same, but increased the deduction phase-out range for traditional IRAs and the contribution phase-out range for Roth IRAs. (J. David Ake/Getty Images/Getty Images)
For individual taxpayers who are also covered by a workplace retirement plan, the phase-out range for the IRA contribution tax has increased to $79,000 to $89,000 — up from $77,000 to $87,000. For married couples filing a joint tax return, the phase-out range increases to between $126,000 and $146,000, an increase of $3,000 from last year.
The income phase-out range for taxpayers contributing to a Roth IRA has increased to between $150,000 and $165,000 for individuals and heads of household — from $146,000 to $161,000. For married couples filing jointly, the phase-out range increases by $6,000 to $236,000 to $246,000.
Each year, the IRS reviews and updates the contribution and eligibility thresholds for retirement accounts such as 401(k)s and IRAs to adjust for inflation. (iStock)
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this Credit savingsAlso known as the retirement savings contributions credit, for low- and moderate-income workers it is $39,500 for individuals, $79,000 for married couples filing jointly, and $59,250 for heads of household.
This article was originally published on November 1, 2024.