The year 2025 is upon us! There is no doubt that this will be an eventful time for retirement accounts. As the new year kicks off, here is what we are talking about now at the Slott Report.
1. Increased contribution opportunities. New catch-up contribution options for certain older individuals are here!
For 2025, those who are age 50 or older can contribute an additional $7,500 as salary deferrals to their employer plan. However, those who are aged 60, 61, 62 or 63 at year’s end can contribute even more. They can contribute an additional $11,250 — instead of $7,500.
For SIMPLE IRA plans, those who are age 50 or older can contribute an additional $3,500. The SECURE 2.0 Act also increased the SIMPLE IRA catch-up contribution limit for certain individuals. For 2024 and 2025, the catch-up contribution limit for a business with 25 or fewer employees is automatically increased to $3,850. Businesses with 26 – 100 employees can allow this higher contribution limit, but only if they provide a 4% (instead of 3%) matching contribution, or a 3% (instead of 2%) across-the-board contribution.
Additionally, for 2025, those SIMPLE IRA plan participants who are aged 60, 61, 62 or 63 at year’s end can contribute an additional $5,250 — instead of $3,500 or $3,850.
At the Slott Report, we are getting many questions on how these new complicated rules work, so expect to see some deep dives into the all the details in upcoming posts.
2. Potential tax law changes. Whenever a new administration takes over, the chances for big legislative changes go up.This year, the odds increase even more with one-party control of both the Presidency and Congress. When you add to the mix the fact that the individual tax provisions from the Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025, the possibility of significant tax law changes is real.
There is no doubt that retirement savings will be impacted as Congress takes on the tax code. We will be following it all here at the Slott Report.
3. More Roth opportunities. With new tax legislation and breaks, inevitably comes discussion of how to pay for it all. Roth accounts often are part of the answer. Congress loves Roth accounts because they bring in immediate revenue. Roth accounts have proliferated. We now have Roth SEP and SIMPLE IRAs, and mandatory Roth catch-up contributions are scheduled to begin in 2026 for some high-income earners. The lead-up to TCJA back in 2017 even brought discussions of all 401(k) contributions being required to be Roth.
We at the Slott Report expect to see many more Roth opportunities in 2025 and future years.
4. Recent and upcoming regulations. The year 2024 brought us both long-awaited final SECURE Act regulations and proposed SECURE 2.0 regulations.In 2025, we know that annual required minimum distributions (RMDs) will be mandatory during the 10-year rule for many beneficiaries, and we know how the new rules for spouse beneficiaries will work.
At the Slott Report, we will be watching how these new rules are put into practice as well as monitoring any new guidance from the IRS. We are still eagerly awaiting guidance on more issues such as rollovers from 529 plans to Roth IRAs. Stay tuned for future updates.
5. Distribution planning. There has always been a focus on the importance of accumulating retirement savings. However, as the baby boomer generation reaches retirement age, it has become increasingly apparent that, as important as saving for retirement is, when it comes to tax advantage retirement accounts, it is equally important to focus on distribution planning. Doing so allows savers to keep more of their hard-earned money, instead of giving it over to Uncle Sam.
Here at the Slott Report, we expect to focus more on this part of the retirement savings process in 2025.
Stay tuned! The year ahead promises to be an exciting one. We hope you continue to follow the Slott Report for all the latest retirement account news, analysis and discussion!
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
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