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The new year is a great time reassess your retirement goals to ensure you are still on track. This may mean increasing your contributions, but before you make any changes you should be aware that the Internal Revenue Service (IRS) has released new limits for certain retirement accounts for the coming year.

While we feel it is important to provide this informtion and keep our clients updated this is not meant to be tax advice. Please consult with an accounting or tax professional before making any changes to your 2025 tax strategy. 

Individual Retirement Accounts (IRAs) 

 

Traditional IRA contribution limits will remain at $7,000 for 2025. Catch-up contributions for those over age 50 also remain at $1,000, bringing the total limit to $8,000. 

Remember, once you reach age 73, you must begin taking required minimum distributions from a Traditional IRA in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. 

Roth IRAs 

 

The income phase-out range for Roth IRA contributions increases to $150,000-$165,000 for single filers and heads of household, a $4,000 increase. For married couples filing jointly, phase-out will be $236,000-$246,000, a $6,000 increase. Married individuals filing separately see their phase-out range remain at $0-10,000. 

To qualify for the tax-free and penalty-free withdrawal of earnings, Roth 401(k) distributions must meet a five-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals can also be taken under certain other circumstances, such as the owner’s death. 

Workplace Retirement Accounts 

 

Those with 401(k), 403(b), 457 plans, and similar accounts will see a $500 increase for 2025, the limit rising to $23,500. Those aged 50 and older will continue to have the ability to contribute an extra $7,500, bringing their total limit to $31,000. 

Once you reach age 73 you must begin taking required minimum distributions from your 401(k) or other defined-contribution plans in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. 

SIMPLE Accounts 

 

A $500 increase in limits for 2025 gives individuals contributing to this incentive match plan a $16,500 stoplight. 

Much like a traditional IRA, once you reach age 73, you must begin taking required minimum distributions from a SIMPLE account in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. 

 

If you have any questions or if you are unsure if your financial strategy is on track for retirement please reach out. As always we are here to help!

 

**The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.