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Getting Familiar with 2025 Contribution Limits and Super Catch-Up

January 7, 2025

By: Dana Udumulla

Key Points 

  • Typically, every year the IRS adjusts the IRA contribution limits in alignment with cost-of-living, also referred to as the SECURE ACT 2.0.
  • Self-Directed Traditional IRA (SDIRA) and Self-Directed Roth IRA account holders can stick to their current approach, as contribution limits remain the same in 2025.
  • 2025 contribution limits for both Self-Directed SIMPLE IRAs and Self-Directed SEP IRAs have increased.
A sign reading 2025, with the financial mascot (piggy bank), and an increasing flow of money, indicating that some of the 2025 contribution limits are increasing.

Change remains a constant, and this includes the 2025 contribution limits. This new year brings opportunities, some involving certain higher IRA contribution limits that could benefit investors. Now is the perfect time to reassess your retirement savings strategy and take advantage of these escalations. 

Let’s Begin the 2025 Contribution Limits with What’s Maintaining Stability

Regular Self-Directed IRAs (SDIRAs) and Self-Directed Roth IRAs will remain sanctioned in the same numerical spot for 2025. This means that 2024’s allotted $7,000 will persist for 2025 contribution limits. Like last year, those who are age 50 and older are eligible for a catch-up contribution of $1,000, totaling to an allowed $8,000 of contributions annually. 

A pair of investors strategizing their new year retirement plan in alignment with the updated 2025 contribution limits.

What has transformed this year for Self-Directed Roth IRAs is the Modified Adjusted Gross Income (MAGI). Single filers can contribute the full $7,000 so long as their annual earned income is less than $150,000. Yet, if their earnings equal to an amount between $150,000 and $165,000 they’re allowed to contribute a partial amount. Married couples that opt to file jointly should check that their combined income is less than $236,000. Still, if their MAGI rests between $236,000 and $246,000 they can also contribute partially. 

This is a rise from the permitted MAGI in 2024, which only gave single individuals a span of earned income from $146,000 to $161,000 and jointly filed returns $230,000 to $240,000.  

The IRAs Impacted by Changing 2025 Contribution Limits

Both SIMPLE IRAs (Savings Incentive Match Plan for Employees) and SEP IRAs are bestowed with higher 2025 contribution limits than 2024.   

SEP IRAs are designed for self-employed individuals. It’s arranged so that said individuals can make contributions ranging from 0% to 25% of their net income. Their maximum contributions for 2025 are $70,000 which is a thousand dollar increase from 2024’s $69,000. 

As of 2025, SIMPLE IRAs can contribute up to $16,500, a $500 increase from 2024’s $16,000. Catch-up contributions have thus equally gone up, as employees aged 50-59 or 64 and older can contribute an extra $3,500. Employees who are aged 60-63 are now positioned into a bracket where they can contribute a whopping $5,250. 

Introducing the “Super Catch-Up” Contribution: An Additional Bonus to 2025 Contribution Limits

There’s a development imparted onto this year’s contribution limits, and it’s the so-called “super catch-up” contribution. In amendment with the SECURE ACT 2.0, this helps boost retirement savings for late-state savers aged 60 to 63. In this range, the catch-up contribution is now $11,250, an impressive rise from 2024’s $7,500. This was integrated to further help those closer to retirement cultivate a heftier cushion during a significant retirement planning window. 

Those who qualify for this supplemental catch-up are SIMPLE IRAs, 401(k)s (including solo 401(k)s), 403(b)s, 457 plans, and Thrift Savings Plans.  This provision will likely prove to be beneficial to those nearing this age (or of this age) who started saving for retirement later in life. It will help impart a sense of security and safety as the period of retirement broaches.  

Balance Your Retirement Planning with 2025’s Contribution Limits, explaining the changes that are being implemented for Self-Directed IRAs, Self-Directed Roth IRAs, SIMPLE IRAs, and SEP IRAs, as well as the new super catch-up limit.

Recalibrating, Refocusing, and Reorganizing

Adapting your retirement savings blueprint to match with the 2025 contribution limits can help you get the most out of your account and build a strong foundation for your future. It’s strongly encouraged that during your re-strategizing sessions, you consult a financial advisor or other financial professionals. Knowledgeable on 2025 contribution limits and various IRS regulations, they can possibly provide a pathway to accruing your ideal revenue for your retirement. 

Many also consider it best practice to regularly visit the IRS website to take stock of all IRA changes taking effect for the year ahead. 

There’s no time like the present to start creating a haven. Our team of specialists prioritize providing you with education so that you can become self-confident in making all your own self-directing decisions. In 2025, take matters into your own hands. Schedule a free discovery call to get your questions answered and learn about all available alternative asset classes through IRAs.

A figurine of a retired couple is nestled between large stacks of coins, showing that having money put away for your retirement can possibly bring on a sense of security.

   


Disclaimer: All of the information contained on our website is a general discussion for informational purposes only. Madison Trust Company does not provide legal, tax or investment advice. Nothing of the foregoing, or of any other written, electronic, or oral statement or communication by Madison Trust Company or its representatives, is intended to be, or may be relayed as, legal, tax, investment advice, statements, opinions, or predictions. Prior to making any investment decisions, please consult with the appropriate legal, tax, and investment professionals for advice.

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