Contributions to Qualified Accounts for 2024 and 2025

As 2025 gets underway, your CAISSA team wants to call your attention to several planning considerations for the year ahead. Please consult your CAISSA advisor to explore these topics in more detail. 

Employer Retirement Plans 

1. • The contribution limit for employer sponsored retirement plans (including 401(k), 403(b), Solo 401(k) plans, and 457 Government plans) has increased for 2025 to $23,500 (from $23,000), with an additional $7,500 available for those over age 50. 
   • There is an additional provision for those age 60-63 that increases the standard catch-up contribution to (1) $10,000 or (2) 150% of the standard age 50+ amount, whichever is greater. For example, in 2025 the $7,500 standard catch-up amount would instead provide adjusted catch-up potential for those age 60-63 of $11,250 ($7,500 * 150%).
   • Contributions to employer sponsored retirement plans must be made on a calendar year basis – meaning the full $23,500 (or $31,000 for those over age 50) must be contributed by December 31, 2025.
   • Many employer-sponsored plans offer a matching contribution. Be sure to understand what the matching opportunity is and contribute, at a minimum (if feasible), up to that amount. 
   • If you are a high-income earner and your employer sponsored plan offers a Roth-based component, strongly consider taking advantage of it. Roth IRAs have income limitations that preclude contributions once income is over a certain threshold, a constraint that does not apply to employer sponsored Roth plans. 

Individual Retirement Accounts

1. • The contribution limit for IRAs remains level for 2025 at $7,000, with an additional $1,000 contribution available for those over age 50. 
   • Anyone is eligible to make an IRA contribution up to the annual limit, but whether that contribution is tax-deductible or eligible for Roth treatment depends on a host of factors you should consult your advisor on.
   • Unlike employer sponsored plans, contributions to IRAs must be made by the tax filing deadline (April 15th of the following year). So, there is still time to contribute to IRAs for 2024, as well as make progress towards the 2025 limit.

Health Savings Account 

1. • A health savings account (H.S.A.) is another tax-deductible savings opportunity that exists for anyone participating in a high deductible health care plan. The family limit for 2025 is $8,550 (up from $8,300 in 2024); the single limit is $4,300 (up from $4,150 in 2024). Those who are 55+ may make an additional catch-up contribution of $1,000.
   • Be aware that employer contributions made on your behalf count towards the annual limit. 
   • Contributing to your H.S.A. through employer paycheck deferrals reduces the FICA taxes otherwise applicable. If you have the option to contribute through an employer plan vs. a direct contribution, there may be some tax savings available for doing so.  
   • Contributions to an H.S.A. for 2024 can be made up until April 15, 2025.