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Date: January 7, 2025

2025 Investment & Retirement Account Contribution Limits: A Guide of What to Know

As we turn the page to 2025, it’s important to note how much you can invest in various types of accounts. Avoiding excess contributions to these accounts is crucial to prevent IRS penalties. Understanding the limits can also help you plan and save consistently throughout the year.

Let’s dive in.  

Quick Overview

  • 401(K) contribution limit: $23,500
  • Traditional IRA: $7,000
  • Roth IRA: $7,000
  • SEP IRA: $70,000 or 25% of income
  • HSA: $4,300 (individual) or $8,550 (family)
  • FSA: $3,300 

Retirement Account Contribution Limits

401(k) Contribution Limits for 2025

In a press release from Nov. 2024, the IRS announced that it is increasing the contribution limit for 401(k) accounts for 2025 to $23,500. The IRS has now raised the contribution amount in each of the last four years. The contribution limits for the last five years are as follows: 

  • 2024: $23,000
  • 2023: $22,500
  • 2022: $20,500
  • 2021: $19,500
  • 2020: $19,500

For those employees who are age 50 or older, there is an additional component to 401(k) contribution limits, which is known as the catch-up contribution limit. Broadly speaking, those who are above 50 can typically contribute an additional $7,500 to their 401(k) account in 2025, for a total contribution limit of $31,000. 

If you’re an employee between 60 to 63 years of age, there is a separate, higher limit for catch-up contributions. That 401(k) catch-up amount for employees who are 60, 61, 62, or 63 is $11,250 for a total contribution limit of $34,750. 

These limits we’ve listed are not just for 401(k) accounts. The guidance from the IRS also applies to the following accounts: 

  • 403(b) plans 
  • Governmental 457 plans
  • Federal government’s Thrift Savings Plans

Traditional IRA Contribution Limits for 2025

While the 401(K) limit increased for 2025, the Traditional IRA contribution amount will remain the same at $7,000. There is also an additional catch-up contribution limit for Traditional IRA accounts of $1,000. Anyone who is 50 or older could generally contribute up to $8,000 to a Traditional IRA account. 

Roth IRA Contribution Limits for 2025

Just like with a Traditional IRA, Roth IRA contribution limits for 2025 are identical. You can contribute up to $7,000 if you’re under 50 years old, with a catchup contribution of $1,000 for those 50 and older. 

Unlike a Traditional IRA, a Roth IRA involves income limits. The income phase-out range is up for 2025.

  • Single file/head of household: $150,000-$165,000 (2024: $146,000-$161,000)
  • Married filing jointly: $236,000-$246,000 (2024: $230,000-$240,000)

If you fall within the income phase-out range, you should consult with a tax or financial professional before contributing to a Roth IRA. 

SEP IRA Contribution Limits for 2025

A Simplified Employee Pension IRA (SEP IRA) is a retirement account commonly used by business owners, self-employed individuals, and freelancers. 

While it has IRA in the name, this type of retirement account has a much higher limit than a traditional IRA. In 2025, you can contribute up to $70,000 or 25% of your compensation to a SEP IRA. 

If you’re self-employed or a freelancer, the term “compensation” may not be very straightforward. As you may well know, how much the business makes isn’t necessarily how much you bring home. Per the IRS, compensation in this regard is defined as: 

  • Your net earnings from self-employment, less the following deductions:
    • One-half of your self-employment tax and
    • Contributions to your own SEP-IRA.

Healthcare Accounts

Health Savings Account (HSA) Contribution Limits for 2025

Health Savings Accounts (HSAs) offer three key tax advantages, making them an excellent long-term investment tool:

  • Current year contributions are tax-deductible. 
  • Investment growth within the account isn’t taxed. For example, if you start with $1,000 and market gains push that amount to $2,000 by 2026, the $1,000 of growth isn’t taxed. 
  • Distributions from your HSA aren’t taxed as long as they are for qualifying medical expenses. 

In 2025, the contribution limit for an HSA is $4,300 for self-only coverage and $8,550 for family coverage. Similar to IRA and 401(k) contribution limits, there is a catch-up amount for those who are 55 and older. That catch-up amount for an HSA is $1,000 in 2025. 

To qualify for an HSA, you must meet specific eligibility criteria, including enrollment in a high-deductible health plan (HDHP). An HDHP has a minimum deductible of $1,600 for individual coverage and $3,200 for family coverage, according to IRS Publication 969. You can find the full list of requirements here

Flex Savings Account (FSA) Contribution Limits for 2025

Unlike an HSA, a Flexible Spending Account (FSA) generally does not allow contributions to roll over into the next calendar year. This type of investment account is more of a year-to-year tool rather than a long-term investment vehicle. 

In 2025, you can contribute up to $3,300 to your Flex Savings Account. If the plan permits, an employer can also contribute to your account. An FSA is a common benefit for employees, and it is only available through an employer, another difference from an HSA. 

Though it’s less common, some FSAs permit a carryover amount between calendar years. The maximum carryover amount for 2025 is $660, up from $640 in 2024. 

Next Steps

While the 2025 contribution limits from the IRS, as well as corresponding tax brackets, seem relatively straightforward, there are still many nuances. And all of these accounts can be a lot to make sense of. 

Which investing accounts are best suited for your financial goals? Does it make sense to invest in a pre-tax account like a Traditional IRA or an after-tax account like a Roth IRA? 

Many people navigate these challenging questions by themselves. But as financial advisors, we help our clients understand all of their options and which path makes the most sense for them. Through a comprehensive financial plan and corresponding investment management strategy, we can clear a route that allows you to better see your financial future.

If you’d like to get a better understanding of your financial picture, you can schedule a free consultation with our team here

Author:

David Watts

Dave is one of the firm’s founders. He helps business owners, professional athletes, and other high-net worth clients develop and implement financial plans and strategies. He also specializes in helping those with single-stock positions to diversify and manage their financial lives. Other areas of specialty are wealth transfer plans for concentrated stockholders and business owners; tax minimization strategies for those with employee stock options; cash flow management; and risk management planning.