As 2025 nears its end, now is the time to review your retirement savings and ensure you are maximizing available tax advantages. For many retirement plans, December 31, 2025, is the deadline to make contributions that count toward your 2025 tax year.
Employer-Sponsored Plans (401(k), 403(b), etc.)
Employee deferrals to plans like 401(k) or 403(b) must be completed by December 31, 2025.
- 2025 Contribution Limit: $23,500
- Age 50+ Catch-Up Contribution: An additional $7,500, for a total of $31,000
- SECURE Act 2.0 Special Catch-Up for Individuals Ages 60-63): An additional $11,250, allowing a total contribution of $34,750
IRA Contributions
You have until April 15, 2026, to make IRA contributions for the 2025 tax year, but contributing now maximizes your investment’s growth potential.
- 2025 Annual Limit: $7,000 (or $8,000 for those age 50+)
- Income Limits: Deductions for traditional IRA contributions and eligibility for Roth IRA contributions depend on your modified adjusted gross income (MAGI). Check with your advisor to confirm if you are eligible to make contributions to your IRA or ROTH IRA
Backdoor Roth Contributions
If your income is over the limit for direct Roth IRA contributions, you may still be able to utilize the backdoor Roth strategy.
- Make a non-deductible contribution to a traditional IRA
- Convert the funds to a Roth IRA for tax-free growth and withdrawals in retirement
Note: This strategy only works if you currently do not have any IRAs
Why Timing Matters
- Tax Savings: Deductible contributions reduce your 2025 taxable income
- Tax-Free Growth: Roth contributions offer tax-free withdrawals in retirement
- Compounding: Early contributions maximize time in the market, boosting long-term growth
Action Step
Review your 2025 contributions to ensure you’re maximizing available limits. Do not miss out on tax savings and growth opportunities!