Maximizing contributions to retirement plans can be a great way to reduce your tax liability and save for your future benefit. Contribution limits vary by type of retirement plan and other details. Below is a brief overview of retirement plans and contribution limits for tax year 2025:
For Employees:
401k:
Employees that have access to 401k plans through their employer can contribute up to $23,500. If you are 50 years of age or older, you can make an additional $7,500 catch-up contribution. If you are age 60 to 63, your catch-up contribution limit is $11,250.
| Age | Standard Limit | Catch-Up Limit | Total |
| Under 50 | $23,500 | N/A | $23,500 |
| 50+ (except 60-63) | $23,500 | $7,500 | $31,000 |
| 60-63 | $23,500 | $11,250 | $34,750 |
Simple IRA:
Employees can contribute $16,500 to a Simple IRA account, plus catch-up contributions if you are 50 years of age or older.
Employees of companies with 25 or fewer employees can contribute up to $17,600 (plus catch-up contributions if you are 50 years of age or older).
| Age | Standard Limit | Catch-Up Limit | Total |
| Under 50 | $16,500 | N/A | $16,500 |
| 50+ (except 60-63) | $16,500 | $3,500 | $20,000 |
| 60-63 | $16,500 | $5,250 | $21,750 |
Traditional IRA and Roth IRA Accounts:
In addition to work-related retirement plans, you can contribute up to $7,000 for tax year 2025 (plus an additional catch-up contribution of $1,000 if you are 50 years of age or older) to a Traditional or Roth IRA account. See my post on IRA Contributions for income limits on deducting traditional IRA contributions and contributing to a Roth IRA.
| Age | Standard Limit | Catch-Up Limit | Total |
| Under 50 | $7,000 | N/A | $7,000 |
| 50+ | $7,000 | $1,000 | $8,000 |
For Self-Employed Individuals and Business Owners:
As a business owner, your contributions can be limited based on the extent other employees contribute to the retirement plan. However, if you do not have any other employees, then you can contribute significant amounts to your retirement plan.
Individual 401k Plans: There are a few contribution limits to be aware of:
Overall $70k limit for each employee (combined for employee & employer contributions), before catch-up contributions for those 50 years of age or older.
Employee Contributions: $23,500 as an employee contribution, before catch-up contributions for those 50 years of age or older.
Company Contributions: The limit on company contributions depends on how your business files its tax returns (e.g. S-Corporation, Schedule C). For S-Corp owners, company contributions are limited to 25% of qualifying W-2 wages.
SEP IRA Plans:
There is an overall limit of $70k for each employee.
Additionally, contributions are limited based on how the business files its tax returns (e.g. S-Corporation, Schedule C). For S-Corp owners, company contributions are limited to 25% of qualifying W-2 wages.
Traditional IRA and Roth IRA Accounts:
In addition to work-related retirement plans, you can contribute up to $7,000 for tax year 2025 (plus an additional catch-up contribution of $1,000 if you are 50 years of age or older) to a Traditional or Roth IRA account. See my post on IRA Contributions for income limits on deducting traditional IRA contributions and contributing to a Roth IRA.
Contact me to discuss this topic in further detail
Please note: the information on this website is intended to provide general advice to start the discussion with your tax professional. The information on this website may not apply to your specific situation. Only an experienced professional with the details of your specific situation can advise you on making the best decision. Contact me or your tax professional to discuss the information on this site to make an informed decision.