The end of the year is a new occasion to boost your retirement savings. As part of your year-end planning for 2024, it’s important to look ahead to the new 2025 IRA contribution rules from the IRS.
Each year, the IRS sets new limits on how much you can contribute to traditional IRAs and Roth IRAs. This contribution limit goes up each year based on inflation (what the IRS calls cost-of-living adjustments, or COLA).
As of this writing, the IRS has not yet announced the new IRA contribution limits for 2025. But no matter what the new IRA limits are for 2025, here are a few key strategies that everyone should consider as you get ready to save and invest for retirement in 2025 and beyond.
Use a Roth IRA if you qualify
Using a Roth IRA is one of the best ways to save for retirement, because it lets your money grow tax free, and gives you tax-free distributions in retirement. Unlike a traditional IRA or 401(k), the money you put into a Roth IRA does not give you a tax deduction. But instead, that money grows tax free and can provide you with tax-free income in retirement. For 2024, people who qualify for a Roth IRA can put up to $7,000 into this special retirement account. And people aged 50 and over can put in an extra $1,000 as a catch-up contribution. Ready to boost your retirement savings with tax-free growth and tax-free distributions? Click here to learn more about the best Roth IRA accounts — these top-ranked brokerages can help you open a Roth IRA quickly to start investing your extra cash. But not everyone qualifies for a Roth IRA. There are some restrictions based on your income and tax-filing status. For example, for 2024, these people can make a full contribution to a Roth IRA:- Single filers with modified adjusted gross income of less than $146,000
- Married filing jointly with modified adjusted gross income of less than $230,000
Maximize your combined IRA contribution limit
If you would rather get an upfront tax break on your IRA contributions, you don’t have to use a Roth IRA. You can choose a traditional IRA and get a tax deduction (for 2024) of up to $7,000 if you qualify — or up to $8,000 with a catch-up contribution for people age 50 and up. There are a few restrictions, based on income and tax-filing status, for who can get a tax deduction from a traditional IRA. As of 2024, these people can deduct the full amount of traditional IRA contributions:- Single filers
- Married filing jointly with a spouse who is not covered by a workplace retirement plan
- Married filing jointly with a spouse who is covered by a workplace retirement plan, with modified adjusted gross income of less than $230,000