You read that headline correctly. You can still potentially reduce your tax liability for last year by making contributions to your eligible qualified accounts by April 15, 2025.
And to maximize your tax savings for this year, it’s good to familiarize yourself with any changes in contribution limits for 2025.
Make Contributions for 2024 until April 15, 2025
Last year the full amount you could contribute to an Individual Retirement Account (IRA) was $7000, with an additional $1000 allowed if you are 50 or older. This limit applies to an individual not covered by a workplace retirement plan. However, even if you do have a workplace plan, you still may be able to take a partial deduction for your IRA. It depends on your adjusted gross income (AIG), so consult with your tax professional.
An employer plan does not affect your Roth IRA limit, since you are choosing to pay the taxes up front.1
The 2024 limits for a Health Savings Account (HSA) were $4150 for an individual and $8300 for a family, with an additional $1000 catch-up for those 55 and older.2 Because contributions to an HSA are tax deductible going in and tax-free when used for medical costs or retirement income, it can make sense to fund this account to the allowed limit.
If you are self employed, you may qualify for a Simplified Employee Pension plan (SEP) IRA. In 2024 the limit was 25% of income with a maximum contribution of $69,000.3
Plan Your Contributions for 2025
Congress has been addressing the problem of Americans not saving enough for retirement by enacting rules to make saving easier. Over the past few years, this has included raising the allowable contribution limits on retirement accounts as well as allowing more flexibility for participants.
The surest (and most painless) way to fully fund your retirement accounts is by spreading your contributions over the year. It’s a simple process of determining your annual contribution limits for each kind of account, and then dividing by twelve. Your advisor can help ensure you’re on track to maximize your contributions, and if needed set up automatic withdrawals so you don’t have to rely on your memory.
For 2025 your income or eligibility may have changed, affecting your contribution limits. So, start by confirming these. Here are some of the new limits for this year:
Traditional IRA: The limit is still $7,000 with a $1000 catch-up if you’re 50 or older.
HSA: The annual limit has increased to $4300 for an individual, $8550 for a family, with an additional $1000 for those 55 and older.
SEP IRA: The annual limit stays at 25% of income, but the threshold increases to $70,000.
Taxes have big implications for your retirement savings. Spending a few minutes to double-check your contributions for 2024, and then planning for 2025 may reduce your current tax burden by thousands of dollars.
Be sure to consult with your tax professional to ensure you are within the allowed limits.
If you ever have any questions about your investments or retirement plans, please feel free to give me a call at 801-545-0696.
Regards,
Mark Lund
Stonecreek Wealth Advisors, Inc.
10421 South Jordan Gateway, Suite 600
South Jordan, UT 84095
Sources:
1. http://go.pardot.com/e/91522/-limits-ira-contributions-2025/9634zf/2570700405/h/MYOwIhVx3SsGqQYCTSCVW_TEw9iLWSfy_v8omteSYbc
2. http://go.pardot.com/e/91522/accounts-hsa-limits-explained-/9634zj/2570700405/h/MYOwIhVx3SsGqQYCTSCVW_TEw9iLWSfy_v8omteSYbc
3. http://go.pardot.com/e/91522/terms-s-sep-asp/9634zm/2570700405/h/MYOwIhVx3SsGqQYCTSCVW_TEw9iLWSfy_v8omteSYbc
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