IRS increases qualified retirement plans limits for 2025

The IRS has provided the inflation-adjusted 2025 dollar limitations for benefits and contributions under qualified retirement plans (Notice 2024-80). A summary of selected key limitations for various plans is provided below:

401(k) Plans: The employee elective deferral limit for 401(k) plans and other retirement accounts (including Roth 401(k) plans) will be $23,500 (up from $23,000 in 2024). The limit for catch-up contributions for individuals 50 and older remains $7,500.

Defined contribution plans: The limit for total employee and employer contributions to defined contribution plans will be $70,000 (up from $69,000 in 2024)
Defined benefit plans: The limit on annual benefits from a defined benefit plan will be $280,000 (up from $275,000 in 2024)
Compensation limits: The annual compensation limit for certain tax-favored retirement plans will be $350,000 (up from $345,000 in 2024)
Individual Retirement Accounts (IRAs): The deductible amount for contributions to an IRA remains $7,000. The limit for catch-up contributions to an IRA for individuals 50 and older is not subject to cost-of-living increases, and therefore remains unchanged at $1,000. The adjusted gross income (AGI) phase-out range for deductibility of IRA contributions for individuals who participate in an employer retirement plan will be increased to between $79,000 and $89,000 for singles (up from between $77,000 and $87,000 in 2024), and to between $126,000 and $146,000 for joint filers (up from between $123,000 and $143,000 in 2024). The AGI phase-out range for contributions to a Roth IRA will be increased to between $150,000 and $165,000 for singles (up from between $146,000 and $161,000 in 2024), and to between $236,000 and $246,000 for joint filers (up from between $230,000 and $240,000 in 2024).

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Jeff Martin

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Grant Thornton Advisors LLC

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