The IRS has released the 2025 cost-of-living adjustments (COLAs) that impact pension plan dollar limitations and various retirement-related provisions. Due to inflation increases, many pension plan limits have been adjusted for 2025, while some remain unchanged. The changes reflect adjustments that meet the statutory thresholds.
The SECURE 2.0 Act, which was enacted as part of Public Law 117-328, allows certain retirement-related amounts to adjust for inflation, beginning in 2024. For 2025, the following adjustments have been made:
The catch-up contribution for IRA owners aged 50 and older remains $1,000.
The amount of qualified charitable distributions (QCDs) from IRAs that are not included in gross income has increased from $105,000 to $108,000.
The dollar limit for premiums paid on qualifying longevity annuity contracts (QLACs) has increased from $200,000 to $210,000.
Key Highlights for 2025
The contribution limit for employees participating in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan has increased from $23,000 to $23,500.
The annual contribution limit to an IRA remains at $7,000. The catch-up contribution limit for individuals aged 50 and over, while subject to an annual cost-of-living adjustment, remains at $1,000 for 2025.
Income ranges for determining eligibility to make deductible contributions to IRAs, Roth IRAs, and for claiming the Saver’s Credit have increased.
IRA Deduction Phase-Out Ranges for 2025
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. The deduction phases out if the taxpayer or their spouse is covered by a retirement plan at work. The new phase-out ranges are based on the taxpayer's filing status and income.
Single taxpayers covered by a workplace retirement plan will now have a phase-out range of $79,000 to $89,000, up from $77,000 to $87,000.
Married joint filers, when the contributing spouse is covered by a workplace plan, now have a phase-out range of $126,000 to $146,000, up from $123,000 to $143,000.
For an IRA contributor not covered by a workplace plan, but whose spouse is, the phase-out is between $236,000 and $246,000, up from $230,000 to $240,000.
For married individuals filing separately and covered by a workplace plan, the phase-out range remains $0 to $10,000.
Roth IRA Contribution Phase-Out Ranges for 2025
Single filers and heads of household will have a phase-out range of $150,000 to $165,000.
Married joint filers will see a phase-out range of $236,000 to $246,000.
For married separate filers, the range remains $0 to $10,000.
Saver’s Credit Income Limits for 2025
The income limits for claiming the Saver’s Credit have also been adjusted:
$79,000 for joint filers,
$59,250 for heads of household, and
$39,500 for single filers and married separate filers.
These adjustments are essential for taxpayers to consider when planning their contributions and retirement strategies for 2025.
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