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Retirement Savings Gets a COLA Bump for 2025

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On November 1, the Internal Revenue Service (IRS) announced its annual update to contribution limits for retirement plans for the 2025 tax year. Individuals can contribute $23,500, up from $23,000 for 2024, to their 401(k), 403(b), 457(b), or the federal government’s Thrift Savings Plan.

The IRS also issued technical guidancei regarding all cost‑of‑living adjustments (COLA) affecting dollar limitations for pension plans and other retirement-related items for tax year 2025 in Notice 2024-80.

This year, the Notice includes several new categories due to changes from SECURE and SECURE 2.0, notably new contribution levels for catch-up contributions for those aged 60-63 (also referred to as the “super catch-up” contribution).

Catch-Up Contributions

The catch-up contribution limit that applies for employees aged 50 and over will remain the same as the 2024 limit: $7,500. Participants aged 50 and older can contribute up to $31,000 in 2025. Not all plans allow the age 50 catch-up contribution so plan sponsors should check their plan document to determine which limits apply to their plan and participants.

Section 109 of SECURE 2.0 has introduced a new catch-up option that is available for participants aged 60-63. If adopted by the plan, this “super catch-up” option allows employees aged 60, 61, 62, and 63 to contribute an additional $3,750 on top of the age 50 catch-up contribution, making their catch-up total $11,250.

See the table below for a breakdown of overall total contributions by age for employer-sponsored retirement plans.

Participant Age

402(g) contribution amount

Age-based catch-up amount

Total allowable contribution amount

>Age 50

$23,500

n/a

$23,500

Ages 50-59

$23,500

$7,500

$31,000

Ages 60-63

$23,500

$11,250

$34,750

Age 64 & older

$23,500

$7,500

$31,000

Saver’s Credit Limit(s)

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) was increased for 2025. Saver’s Credit is a tax credit designed to encourage low- and moderate-income workers to save for retirement. For 2025, income limits are as follows:

  • $79,000 for married couples filing jointly, up from $76,500
  • $59,250 for heads of household, up from $57,375
  • $39,500 for singles and married individuals filing separately, up from $38,250

These limits determine eligibility for the credit, which can be up to $1,000 for individuals or $2,000 for married couples filing jointly.

SIMPLE Retirement Accounts

For 2025, the contribution limits for SIMPLE retirement accounts have increased. Here are the key details:

Individual Retirement Accounts (IRAs)

The annual contribution limit for IRAs will remain the same as 2024, at $7,000. The income ranges for determining eligibility to make deductible contributions into a Traditional IRA did increase to the following ranges:

  • Single taxpayers covered by a workplace retirement plan: $79,000 to $89,000
  • Married couples filing jointly with a spouse covered by a workplace retirement plan: $126,000 to $146,000
  • IRA contributors not covered by a workplace retirement plan but married to someone who is: $236,000 to $246,000
  • Married individuals filing separately: $0 to $10,000 (unchanged)

These ranges determine the phase-out limits for deducting contributions based on your income and filing status. 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. The new phaseout ranges can be found in Notice 2024-80.

The IRA catch‑up contribution limit for individuals aged 50 and over was amended under SECURE 2.0 to include an annual cost‑of‑living adjustment – but remains $1,000 for 2025.

To contribute to a Roth IRA, individuals must fall within the following income limits:

  • Single taxpayers and heads of household: The phase-out range is between $150,000 and $165,000
  • Married couples filing jointly: The phase-out range is between $236,000 and $246,000
  • Married individual filing a separate return: The phase-out range remains between $0 and $10,000

Details on these and other retirement-related cost-of-living adjustments for 2025 are in Notice 2024-80, available on IRS.gov.

1 In case you were wondering, the groundwork for all this is contained in Section 415 of the Internal Revenue Code, which provides for limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limitations for cost-of-living increases. Under section 415(d), the adjustments are to be made under adjustment procedures similar to those used to adjust benefit amounts under section 215(i)(2)(A) of the Social Security Act.
IRS Announcement 2025
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