Why it matters
- Understanding 2025 contribution limits and catch-up options could help you save thousands more for retirement each year.
- Recent increases in contribution limits give you opportunities to reduce your current taxable income while saving for your future.
- Whether you’re just starting out or nearing retirement, knowing these contribution limits can help you make more informed decisions about saving and investing for retirement.
Whether retirement is around the corner or still a ways down the road, now is a great time to start or increase contributions to your retirement savings accounts. (If you’re a little rusty on the basics, check out our quiz on how to save for retirement.) The more you’re able to save, and the more time you have to make your contributions, the more likely you’ll be able to live the lifestyle you want in retirement. So let’s explore how you can maximize your retirement potential by learning about the 2025 contribution limits.
How much should you contribute to retirement?
There’s no set rule for how much you should contribute to your retirement savings. Several factors — like your age, income, and financial obligations — impact that number. But most financial professionals agree that saving 15 percent of your annual income is a good target. Regardless, the later you start saving, the more you may need to contribute.1 When deciding how much you need to save, consider your goals, the age you want to retire, and the kind of lifestyle you want in retirement . Again, financial experts recommend saving up to 15% of your income each year for retirement, but determining how much money you’ll actually need comes down to what makes sense for you and your specific situation. A financial professional can help you get clarity on your goals and create a personalized plan to help maximize your savings and prepare for the retirement you envision.
If you’re lucky enough to have an employer-sponsored retirement savings account — like a 401(k) or 403(b) — you should consider enrolling in the plan and contribute as much as you’re able. Many employers will match your contributions dollar for dollar, up to a certain percentage. At the very least, contribute as much as your employer matches.2 Otherwise, you’re missing out on extra money. Also, 401(k) and 403(b) contributions are made with pre-tax deductions from your paycheck, so they lower your taxable income for the year.
If you don’t have access to an employer-sponsored plan, then think about contributing to an individual retirement account (IRA). There are a few types of IRAs, but the most common are traditional and Roth. Some people can deduct either a portion or all their contributions to a traditional IRA from their taxes for that year.3 Your contributions to a traditional IRA being tax deductible or not depends on your income level and whether you’re covered by a retirement plan through your employer. When you start withdrawing funds from a traditional IRA, you’ll pay income tax on the money then.
On the other hand, contributions to a Roth IRA are made with after-tax dollars, so they don’t lower your taxable income right now. However, you won’t pay taxes when you start to pull funds in retirement.
2025 retirement plan contribution limits
If you’re reading this, you probably want to put as much money as you can into your retirement account. But you should know that the IRS sets annual contribution limits for retirement accounts, such as 401(k)s, 403(b)s, and IRAs. The limits have increased for 2025 due to recent cost of living adjustment (COLA) changes.4 If you have a SIMPLE, SEP, or other type of IRA, don’t forget to review their annual contribution limits, as well.
401(k) and 403(b) contribution limits for 2025
In 2025, you can contribute up to $23,500 to 401(k) or 403(b) plans. The limit for these plans was $23,000 in 2024.4
Traditional IRA and Roth IRA contribution limits for 2025
While traditional and Roth IRAs are very different, they share the same contribution limit. In 2025, you can contribute a maximum of $7,000 to either of these types of IRA.4 Keep in mind that you might not be allowed to contribute the full amount — or at all — to a Roth IRA if you make above a certain income for your tax filing status.3
Take advantage of catch-up contributions
If you’re aged 50 or older, you’re allowed to make what’s called a “catch-up contribution” to your retirement account every year. These special contributions increase your annual contribution limit by a specific amount, giving your retirement savings an extra boost. They’re especially helpful if you weren’t able to save enough at an earlier age and want to make up for lost time. The IRS also sets annual limits on catch-up contributions.
Catch-up contribution limit for 401(k) and 403(b) plans
In 2025, the catch-up limit for those age 50 and older for 401(k) and 403(b) plans is $7,500.4 This means you could contribute up to a total of $31,000 to your plan in one year. A higher catch-up contribution limit of $11,250 applies for employees age 60 to 63 who are participating in these plans.4
Catch-up contribution limit for IRAs
In 2025, the catch-up limit for traditional and Roth IRAs is $1,000.4 This means you could contribute up to a total of $8,000 in one year to your IRA.
Can you contribute to an IRA, 401(k), or 403(b) account after retirement?
People are living longer, and that’s good news. But it also means we have to plan for longer retirements and all the possibilities they can bring. Continuing to fund a retirement account while retired might be a good option for many of us.
If you have an employer-sponsored plan, you can only contribute to it while you’re employed. So if you leave your job for any reason — including retirement — your payroll deductions to that plan will stop. However, you’re generally still free to leave the money in your account, as long as you have at least $5,000 invested.5 It can continue to grow, tax-deferred, and you’ll be able to take distributions from it.
To continue making contributions during retirement, you’ll need to roll over the money in your 401(k) or 403(b) to an IRA. As long as you have some kind of earned income (such as wages, salaries, tips, commissions, bonuses, self-employment earnings, and other types of income), you can contribute to either a traditional or Roth IRA throughout your retirement.6 Previously, people weren’t allowed to contribute to their traditional IRAs after age 70½, but the SECURE Act of 2019 did away with that rule because a traditional IRA holder must begin taking required minimum distributions starting at age 73.6
That’s a quick overview of ways you can maximize your retirement potential by contributing as much as you can to your savings – even maxing out your accounts, if possible. As always, it’s a good idea to speak with your financial professional if you have questions about saving for your retirement. They can help you determine if you’re putting enough away and whether you’ll want to continue your contributions after you retire.
Things to consider
- Review your current retirement account contributions and compare them to the 10-15% target recommended by most financial professionals. If you’re not there yet, don’t worry. Set aside as much you can, and aim to gradually increase your contributions over time.
- Check to see if you’re contributing enough to get the full match from your employer. If not, adjust your contributions right away to take advantage of the extra boost to your retirement savings.
- Talk to a financial professional to discuss catch-up contributions if you’re age 50 or older.
1“What Percentage of Your Salary Should Go Toward Retirement,” Investopedia.com, July 2024
2 “How Much Should I Contribute to My 401(k)?” Investopedia.com, November 2024
3 “Individual Retirement Accounts,” FINRA.org, accessed February 2025
4 “401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000,” IRS.gov, November 2024
5 ““401(k) Withdrawal Rules: How to Avoid Penalties,” Investopedia.com, May 2024
6 “Can a Person Who Is Retired Continue to Fund an IRA?” Investopedia.com, November 2024
Transamerica Resources, Inc. is an Aegon company and is affiliated with various companies which include, but are not limited to, insurance companies and broker dealers. Transamerica Resources, Inc. does not offer insurance products or securities. The information provided is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical or financial advice or guidance. Please consult your personal independent professionals for answers to your specific questions.
