2025 Contribution Limit Updates

New year, new contribution limits! The IRS just dropped the 2025 updates for retirement and health savings accounts, so if you’re looking to stack those tax-advantaged savings, here’s what’s up. Whether you’re new to these accounts or a pro at maxing out, understanding the latest limits can help you save smart.

Traditional and Roth IRAs

- Contribution Limit: Still $7,000 if you’re under 50—same as last year.

- Catch-Up: If you’re 50 or older, you get an extra $1,000, taking you to $8,000 total.

Why It Matters: IRAs are the real deal for tax benefits! Traditional IRAs let your money grow tax-deferred, while Roth IRAs grow tax-free. Both are essentials in building a strong retirement game plan.

SIMPLE IRA

- Contribution Limit: Bumped up to $16,500 (from $16,000).

- Catch-Up: 50+? You can toss in an extra $3,500, capping out at $20,000.

Why It Matters: Working for a small biz? SIMPLE IRAs are perfect for you, with employer contributions on top. And now, the higher limit means you can stack up even more for retirement.

SEP IRA

- Contribution Limit: Now at $70,000, a slight increase from last year’s $69,000.

Why It Matters: SEP IRAs are tailored for self-employed folks and small biz owners wanting to contribute bigger amounts. With this higher limit, it’s a great way to grow savings and get tax breaks at the same time.

401(k), 403(b), and 457 Plans

- Contribution Limit: Upped to $23,500 (from $23,000).

- Catch-U: For those 50+, the catch-up stays at $7,500, totaling $31,000. If you’re between 60 and 63, there’s a new "super catch-up" of $11,250.

Why It Matters: If your job offers one of these plans, use it! Employer matches and tax perks make these a no-brainer. The new limit lets you build even more retirement funds faster.

Health Savings Accounts (HSAs)

For those with high-deductible health plans, HSAs allow you to contribute with big tax advantages.

- Individual Coverage: 2025 limit is $4,300.

- Family Coverage: For family plans, it’s $8,550.

- Catch-Up: Those 55+ can add $1,000 more.

Why It Matters: HSAs are triple tax-advantaged: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. These new limits make it easier to save for both present and future health costs.

Quick Recap

The IRS is raising limits on several retirement and health savings accounts, giving you more space to save and grow. Here’s a look at the highlights:

- Traditional/Roth IRAs: $7,000 ($8,000 for 50+)

- SIMPLE IRAs: $16,500, with a $3,500 catch-up

- SEP IRAs: $70,000 limit

- 401(k)/403(b)/457: $23,500, with $7,500 catch-up ($11,250 for 60-63)

- HSAs: $4,300 for individuals, $8,550 for families, plus a $1,000 catch-up for 55+

Final Thoughts

Keeping up with these updated contribution limits lets you maximize your tax-advantaged savings for 2025. The increases in these accounts mean you can set aside more for your future and take full advantage of the perks. So, check in on your retirement and health savings strategies this year and talk to a financial pro if you’re looking to make the most of it.