Saving for retirement can feel like a daunting task, especially with different approaches and timing involved. While some people begin saving early in their careers, others focus on maximizing contributions as they get closer to retirement.
Recognizing that many people start their careers with debts, lower income, and various financial obligations, the Internal Revenue Service (IRS) has introduced provisions designed to help older adults accelerate their retirement savings as they approach retirement age.
Vanguard’s How America Saves report reveals that only 14% of employees take full advantage of their employer-sponsored retirement plans, a missed opportunity given the benefits of employer matching and the ease of building a retirement fund through these plans.
Many Americans lack adequate retirement savings, and maximizing contributions to these plans could make a significant difference. There exists a gap between the potential for retirement savings and the reality of how much workers actually save.
However, the IRS’s new provisions for older adults could bridge this gap, as older individuals typically have higher salaries and reduced debts, allowing them to contribute more toward their retirement accounts.
Enhanced IRS Retirement Contribution Limits for 2025
The IRS has raised contribution limits for various retirement savings plans in 2025, impacting popular plans such as 401(k)s, 403(b)s, 457 governmental plans, and the federal Thrift Savings Plan. The annual employee deferral limit for these workplace plans will rise from $23,000 to $23,500. But the most notable update benefits employees between ages 60 and 63.
For employees aged 50 and over, the “catch-up” contribution remains at $7,500, enabling them to save up to a total of $31,000 annually. However, the IRS has introduced an additional “super catch-up” contribution tier for workers aged 60 to 63, which increases their limit to $11,250.
Employers must update their retirement plans to accommodate this additional contribution, providing near-retirees with more savings power. Richard Pon, a certified public accountant based in San Francisco, highlights the importance of taking advantage of these provisions early.
He cautions, “Once you turn 64, you’re no longer eligible for the super catch-up contribution and can only make regular catch-up contributions.” This emphasizes the urgency for those aged 60 to 63 to maximize contributions for a stronger retirement savings strategy.
Additional IRS Adjustments for 2025
Beyond workplace retirement plans, the IRS has also adjusted income ranges for contributions to traditional IRAs and Roth IRAs to reflect cost-of-living increases, extending tax-advantaged savings options to a broader range of taxpayers. Here’s a breakdown of the updated income ranges:
| Category | Income Phase-Out Range (Traditional IRA) | Income Phase-Out Range (Roth IRA) |
|---|---|---|
| Single taxpayers with workplace retirement plan | $79,000 – $89,000 | $150,000 – $165,000 |
| Married couples filing jointly | $126,000 – $146,000 | $236,000 – $246,000 |
The IRS has also revised the income threshold for the Saver’s Credit (Retirement Savings Contributions Credit), which supports low- and moderate-income earners in saving for retirement. For married couples filing jointly, the Saver’s Credit income limit has increased to $79,000.
