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

• Annual contribution limit: $24,500 (up from $23,500).
• Age 50+ catch-up: $8,000, bringing your total to $32,500.
• Special catch-up for ages 60–63: Still $11,250 under SECURE 2.0.

IRAs

• Annual contribution limit: $7,500 (up from $7,000).
• Age 50+ catch-up: $1,100, now adjusted for inflation.

Income Limits for IRA Deductions

• Single, covered by a workplace plan: $81,000–$91,000.
• Married filing jointly, contributor covered: $129,000–$149,000.
• Married, contributor not covered but spouse is: $242,000–$252,000.
• Married filing separately: $0–$10,000 (unchanged).

These updates also affect Roth IRA eligibility and the Saver’s Credit.

• Catch-Up Contributions Indexed for Inflation
  • For IRAs, the age 50+ catch-up limit now adjusts annually for cost-of-living. In 2026, it rises to $1,100 (up from $1,000).
• Higher Catch-Up for Ages 60–63
  • SECURE 2.0 introduced an enhanced catch-up category for participants aged 60–63 in 401(k), 403(b), 457, and Thrift Savings Plans.
  • This remains $11,250 in 2026, separate from the standard $8,000 catch-up for age 50+.
• Mandatory Roth Catch-Up for High Earners
  • Starting in 2026, employees earning $150,000+ (indexed from $145,000) must make catch-up contributions as Roth (after-tax) in employer plans. Plans must allow Roth contributions or these employees cannot make catch-ups.
• Paper Statement Requirement
  • Plans must send at least one paper statement per year unless participants opt for electronic delivery.
• Plan Compliance Deadlines
  • Employers must update plan documents by December 31, 2026, but operational compliance starts January 1, 2026.

Overall Impact

• More Savings Flexibility: Higher limits and inflation indexing help participants save more.
• Administrative Adjustments: Employers need Roth capability for high earners and systems for paper statements.
• Tax Planning Shift: High earners must plan for Roth contributions, affecting pre-tax strategies.

These changes aim to help individuals save more effectively for retirement, provide flexibility in managing retirement savings, and ensure that more people can benefit from employer contributions.

For detailed guidance on how these changes may affect your retirement planning, consult with the experts at TRA. We’re here to help you navigate these new regulations and optimize your retirement savings strategy.

The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $23,500, up from $23,000.

The limit on annual contributions to an IRA remains $7,000. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment but remains $1,000 for 2025.

The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan remains $7,500 for 2025. Therefore, participants in most 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan who are 50 and older generally can contribute up to $31,000 each year, starting in 2025. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in these plans. For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2025.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase‑out ranges for 2025:

• For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $79,000 and $89,000, up from between $77,000 and $87,000.
• For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $126,000 and $146,000, up from between $123,000 and $143,000.
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $236,000 and $246,000, up from between $230,000 and $240,000.
• For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
• The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $150,000 and $165,000 for singles and heads of household, up from between $146,000 and $161,000. For married couples filing jointly, the income phase-out range is increased to between $236,000 and $246,000, up from between $230,000 and $240,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
• The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $79,000 for married couples filing jointly, up from $76,500; $59,250 for heads of household, up from $57,375; and $39,500 for singles and married individuals filing separately, up from $38,250.
• The amount individuals can generally contribute to their SIMPLE retirement accounts is increased to $16,500, up from $16,000. Pursuant to a change made in SECURE 2.0, individuals can contribute a higher amount to certain applicable SIMPLE retirement accounts. For 2025, this higher amount remains $17,600.
• The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most SIMPLE plans remains $3,500 for 2025. Under a change made in SECURE 2.0, a different catch-up limit applies for employees aged 50 and over who participate in certain applicable SIMPLE plans. For 2025, this limit remains $3,850. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in SIMPLE plans. For 2025, this higher catch-up contribution limit is $5,250.

The SECURE 2.0 Act brings several changes that impact the 2025 contribution limits and retirement savings strategies:

• Enhanced catch-up contributions for those aged 60 to 63.
• Mandatory Roth catch-up contributions for higher earners.
• Automatic enrollment and escalation to encourage higher savings rates.
• Matching contributions for employees repaying student loans.
• Increased RMD age to 75.
• Simplified Saver’s Credit to encourage savings among lower-income individuals.

These changes aim to help individuals save more effectively for retirement, provide flexibility in managing retirement savings, and ensure that more people can benefit from employer contributions. For detailed guidance on how these changes may affect your retirement planning, contact the experts at TRA. We’re here to help you navigate these new regulations and optimize your retirement savings strategy.