New IRS limits on retirement account contributions announced this month will take effect in 2025, but contribution rule changes the following year could have a larger affect on some retirement plans, including those of higher-income workers.

Employees can contribute up to $23,500 in 2025 to their 401(k), 403(b), or governmental 457 plan, or their Thrift Savings Plan (TSP) account, the IRS announced Nov. 1. That’s up from $23,000 in 2024. Individual Retirement Account (IRA) contributions remain capped at $7,000.

Some users of all of the above plans can make catch-up contributions exceeding IRS limits, depending on age. The rules for 2025:

• Age 50 and over: 401(k), 403(b), 457, and TSP users can contribute an additional $7,500 in 2025 for a maximum total contribution of $31,000. IRA users can contribute an additional $1,000 for an $8,000 maximum.
  
  
• Ages 60-63: 401(k), 403(b), 457, and TSP users can contribute an additional $11,250 in 2025, for a maximum total contribution of $34,750. This additional catch-up amount does not apply to IRAs.

[RELATED: 2025 Federal Income Tax Brackets Reflect Lower Inflation Levels]

Catch-Up Rules for 2026

Any contribution limits – catch-up or otherwise – for 401(k) plans in 2025 are the same for both pre-tax and Roth accounts. That changes in 2026.

That year, catch-up contributions for 50-and-over plan users can be made into pre-tax 401(k) accounts only by those making less than $145,000 per year. All catch-up funds contributed by those making more than $145,000 must be made into a Roth account, making them after-tax contributions that would be tax free upon withdrawal.

The change, part of the SECURE 2.0 Act of 2022, was to take effect in 2024 but was delayed by the IRS as part of an “administrative transition period.”

Other retirement-related IRS guidance released Nov. 1 includes:

• Deductions and “phase-out ranges” for IRA contributions.
• Changes to income levels for the Retirement Savings Contributions Credit, also known as the “Saver’s Credit.”
• Contribution limits for other types of retirement investments, to include SIMPLE IRA plans.

How MOAA Can Help

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