Retirement Accounts and Plans in 2025: What Changes Can You Expect?

There are several changes happening with retirement plans in 2025, so it’s wise to keep up with these developments to ensure you are maximizing and managing your accounts effectively. Below are six changes for retirement plans you can expect to see in 2025:

1. IRA and 401(k) contribution limits increase.

Contribution limits for traditional and Roth IRAs are going up in 2025. The limit on annual contributions to an IRA rises to $7,000, up from $6,500. Catch-up contributions for taxpayers aged 50 and older are subject to cost-of-living adjustments, but these limits remain unchanged for 2025 at $1,000, or $8,000 in total contributions.

Contribution limits are also going up for 401k and other employer-sponsored plans in 2025. Limits for 401k, 403b, most 457 plans and the federal government’s Thrift Savings Plan will bump up from $23,000 to $23,500. Employees aged 50 and older can make up to $7,500 in catch-up contributions on top of the $23,500 limit, bringing the total contribution limit to $31,000 in 2025. Employees aged 60 to 63 can take advantage of an even bigger catch-up contribution limit of $11,250, a 14% increase from 2024.

2. Phase-out ranges increasing.

Phase-out ranges are also changing. For IRAs for married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range increases to $126,000 and $146,000, up from between $123,000 and $143,000. For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $79,000 and $89,000, up from between $77,000 and $87,000.

For an IRA contributor not covered by a workplace retirement plan who is married to someone who is covered, the phase-out range is increased to between $236,000 and $146,000, up from between $230,000 and $240,000.

To read the full scoop on these changes, check out the IRS site.

3. SIMPLE IRAS and catch-up contributions for people aged 60 – 63.

In 2025, there will be an increase in the catch-up contribution limits for participants aged 60 through 63. The new limit will increase to the greater of $5,000, or 150% of the standard age 50 catch-up contribution limit for SIMPLE IRA plans in 2025. Those aged 60 through 63 can now contribute $5,250 more to SIMPLE plans for 2025. Additional cost of living adjustments will begin in 2026.

4. Annual employee deferrals to SIMPLE IRAs.

In 2025, the contribution limit for annual employee deferrals to SIMPLE IRAs increases by $500 to $16,500. The catch-up contribution of $3,500 for individuals aged 50 or older remains unchanged.

5. New 10-year rule for inherited IRA takes effect.

If you inherited an IRA from someone who died on or after Jan. 1, 2020, you are required to withdraw all funds in the IRA no later than Dec. 31 of the tenth full calendar year following the death of the individual from whom you inherited the IRA. This rule removes the “stretch IRA” strategy that allowed owners of IRAs to pass assets in the account from one generation to the next while taking advantage of prolonged tax-deferred growth of the assets by using a prolonged distribution period.

However, there are exceptions for inherited IRAs and the following four types of beneficiaries can still utilize the “stretch IRA”:

• Surviving spouses
• A child of the decedent under the age of 21
• A beneficiary who is not more than 10 years younger than the decedent
• An individual who is disabled or chronically ill

If you are one of the four types of beneficiaries described above, you must still withdraw funds from the inherited IRA over your lifetime beginning in the year following the decedent’s death. If you’re a surviving spouse, you can transfer the inherited funds from the IRA into your own IRA and are not required to start withdrawing funds from your own IRA until you reach your “required beginning date” (“RBD”).

6. A new retirement savings “lost and found.”

Did you know that, according to the Bureau of Labor Statistics, older American workers have held an average of more than 12 jobs in their lifetime? It can be challenging to keep track of 401(k)s and other retirement accounts through so many different positions. This is the primary reason there are almost a trillion dollars of unclaimed retirement benefits in the U.S.

To help retirees find their lost benefits, the SECURE 2.0 Act created a searchable database housed at the Department of Labor. The Employee Benefits Security Administration (EBSA) is responsible for gathering and uploading the information provided by plan administrators.

The EBSA only started accepting data on Nov. 18, 2024. It’s a good idea to check the database on a regular basis for updates. You’ll need a login and password for .gov accounts. If you don’t have one, you can create an account by providing the following information:

• Legal first and last name
• Date of birth
• Social Security number
• Front and back photo of an active driver’s license