Think Retirement Is Too Far Off to Plan For? Think Again—2025 Changes You Need to Know
Planning for retirement isn’t just about the future—it’s about making smart financial decisions right now that can lower your tax bill, build long-term security, and give you peace of mind.
When you contribute early and consistently to retirement accounts like a 401(k) or IRA:
- Your money has more time to grow with compounding interest
- You reduce your taxable income today
- You’re more likely to reach your long-term savings goals
- You may qualify for valuable tax credits (like the Saver’s Credit)
But to fully take advantage of these benefits, it’s critical to understand the annual IRS contribution limits and rules—and how they apply to your unique financial situation.
At Velin & Associates, Inc., we help individuals and small business owners navigate retirement planning with confidence. Here’s what changed for 2025:
🔹 Increased 401(k), 403(b), and 457 Plan Limits
- New contribution limit: $23,500 (up from $23,000 in 2024)
- Catch-up for age 50+: Still $7,500 → Total: $31,000
- Special catch-up (ages 60–63): $11,250
Why this matters: These plans let you save pre-tax dollars, reduce your current taxable income, and invest in your future. Taking full advantage of these limits requires strategic planning—especially if you’re over 50.
🔹 IRA Contribution Guidelines
- Contribution limit: Stays at $7,000
- Catch-up (age 50+): Remains at $1,000
- Deduction phase-outs increased based on income and filing status
Why this matters: Your ability to deduct IRA contributions depends on your income and whether you’re covered by a retirement plan at work. If you’re unsure, we’ll help you determine eligibility and maximize your tax benefit.
🔹 Roth IRA Income Phase-Out Ranges (2025)
- Singles/Heads of household: $150,000–$165,000
- Married filing jointly: $236,000–$246,000
- Separate filers: Unchanged at $0–$10,000
Why this matters: Roth IRAs offer tax-free growth and withdrawals in retirement, but contributions are restricted based on income. Knowing your limits helps you avoid excess contribution penalties.
🔹 SIMPLE IRA & SIMPLE 401(k) Updates
- Contribution limit: Now $16,500
- Catch-up for age 50+: Still $3,500
- Higher catch-up for ages 60–63: $5,250
Why this matters: SIMPLE plans are a great tool for small business owners and their employees, but contribution limits vary depending on your age and plan type.
🔹 Saver’s Credit Expanded
Income limits to qualify have increased:
- Married filing jointly: Up to $79,000
- Head of household: Up to $59,250
- Single/separate filers: Up to $39,500
Why this matters: If you’re a lower- or moderate-income worker, you may receive a tax credit for contributing to retirement—essentially, the government pays you to save!
Make the Most of These Opportunities With Expert Help
The IRS updates these limits annually, and small details can have a big impact. Whether you’re a business owner setting up employee plans or an individual looking to reduce your tax burden while securing your future, we’re here to guide you.
At Velin & Associates, Inc., we specialize in:
- Retirement contribution strategies
- Tax planning tied to your retirement goals
- Payroll setup that aligns with IRS thresholds
- Personalized advice for business owners and employees alike
📞 Call us today: 323-902-1000
📧 Email: dmitriy@losangelescpa.org
🌐 Visit: www.losangelescpa.org
Start planning smarter—so your retirement works for you.
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.