Retirement & IRS Limits Comparison: 2024-2025
KEY POINTS:
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(1) 401(k) and 403(b) plans have increased to $23,500 limit, with the catch-up contribution remaining at $7,500 for individuals aged 50 and older.
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(2) Profit-Sharing 401(k) plans will see an increase to $70,000 in 2025 for those under 50, with the catch-up contribution staying at $7,500.
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(3) Traditional and Roth IRA contribution limits remain unchanged at $7,000, with the catch-up contribution fixed at $1,000 for individuals aged 50 and older.
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(4) The maximum phase-out income limits for Roth IRAs have risen to $150,000–$165,000 for single filers and $236,000–$246,000 for married couples. For those nearing these limits, consider using a Backdoor Roth IRA strategy.
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(5) The SEP IRA contribution limit has increased to $70,000, up from $68,000, but it remains capped at 25% of net income, whichever is the lower of the two limits.
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(6) SIMPLE IRA contribution limits have increased to $16,500, with the catch-up contribution staying at $3,500 for those aged 50 and older. This employer plan remains less favorable; consider transitioning to a low-cost 401(k) option instead.
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(7) Health Savings Account (HSA) limits have risen to $4,300 for single coverage and $8,550 for family coverage. Flexible Spending Account (FSA) limits have also increased to $3,300 for both single and family coverage.
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(8) The maximum Social Security benefit for individuals filing at their Full Retirement Age (approximately 67 years old) has increased to $5,108 per month.
As we approach 2025, retirement contribution limits including 401(k)s, 403(b)s, SIMPLE IRAs, SEP-IRAs, HSAs, and FSAs, have been adjusted modestly due to stabilized inflation rates. While catch-up contributions for those aged 50+ remain indexed to inflation, the IRS has postponed a Secure Act 2.0 provision requiring high earners ($145,000+ in Social Security wages) to make Roth-only catch-up contributions until 2026. Notably, starting in 2025, individuals aged 60-63 can contribute the greater of $10,000 or 50% more than the standard catch-up amount, providing an opportunity to boost retirement savings during peak earning years.
Optometrists should take full advantage of these changes by maximizing contributions, particularly in higher-earning years or nearing retirement. Consider the benefits of Roth vs. traditional contributions, monitor updates from the IRS, and adjust your financial strategy to align with evolving limits. These adjustments, though incremental, can significantly impact your long-term savings and retirement security.
Source: IRS Notice 2023-75, Notice 2024-80.
Want to learn how to plan for Retirement? Check Out The Optometrist's Guide to Retirement
Want to do the BackDoor Roth IRA? Check Out The Optometrist's Guide to BackDoor Roth IRA
Need a 401K or Profit Sharing? Check Out Recommended 401K Providers
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