2025 Contribution Limits: Supercharge Your Wealth-Building Goals!
Time to open up your checkbook—wait, does anyone still use those? —because the IRS just announced the 2025 contribution limits for retirement accounts, and there’s more room to stash cash for your future self. These numbers might sound dry but think of them as cheat codes to level up your wealth-building game. Let’s jump into the key updates for 2025, so you can start making the most of these fresh opportunities!
401(k) Contributions: The New Limits to Level Up Your Savings
• Employee Contribution (under 50): $23,500 (up $500 from 2024—every bit helps!)
• Catch-Up Contribution (ages 50-59): $7,500 (because experience has its perks)
• Catch-Up Contribution (ages 60-63): $11,250 (extra oomph for the final stretch)
• Total 401(k) Contribution Limit: $70,000 if you’re under 50; those eligible for catch-ups can add even more.
Mega Backdoor Roth 401(k): The Ultimate Power Move
If you’re ready to take things to the next level, the Mega Backdoor Roth 401(k) lets you contribute up to a grand total of $70,000! Here’s how it might look: you contribute $23,500 pre-tax, your employer adds $7,000 in matching funds, and you still have room to pump up your Roth by an additional $39,500. Boom!
IRA Contributions: Small but Mighty
• IRA Contribution: $7,000 (same as 2024)
• Catch-Up Contribution (over 50): An additional $1,000 for a grand total of $8,000
Income Limits for Roth IRA Contributions
• Single: Full contributions allowed with an income under $150,000
• Married: Full contributions allowed with a combined income under $236,000
Income Limits for Traditional IRA Contributions
• Single: Full contributions allowed with an income under $79,000
• Married: Full contributions allowed with a combined income under $126,000
Backdoor Roth IRA
Don’t worry about income limits with a Backdoor Roth IRA! Just make a non-deductible IRA contribution and convert it to a Roth. Pro tip: steer clear of other pre-tax IRAs (like traditional or SEP IRAs), as this could trigger the pro-rata rule, making the conversion partially taxable.
Health and Flexible Savings: Protecting Future You
• HSA Contribution Limit:
o Single: $4,300
o Family: $8,550
• FSA Contribution Limit: $3,300
Other Important Financial Numbers for 2025
• SEP IRA: Contribute up to $70,000 or 25% of W2 wages (or about 20% of business profits if self-employed).
• Simple IRA: $16,500
• Dependent Care FSA: $5,000
• Annual Gifting Limit: $19,000 (feeling generous?)
529 Plan Superfunding: Front-Load College Savings
• Single: Contribute up to $95,000
• Married: Up to $190,000 (for supercharging those college funds)
Estate Tax Exemption: Protect Your Legacy
• Individual Exemption: $13.99 million
• Married Exemption: $27.98 million
Understanding and leveraging these 2025 contribution limits isn’t just about saving money—it’s about building a secure and prosperous future for yourself and your family. By making the most of these updated opportunities, you can take meaningful steps toward your financial goals and unlock the full potential of your wealth-building strategies.
