If you’re nearing retirement (or already enjoying it), 2025 is shaping up to be an important year for your savings strategy. A series of new rules and potential tax law changes could bring fresh opportunities—and a few complications. Here’s a quick rundown of what to expect:
1. Greater Contribution Allowances
Starting in 2025, workers who are at least 50 years old can add an extra $7,500 to their employer-sponsored retirement accounts in addition to the baseline $23,500. However, individuals who turn 60, 61, 62, or 63 by year’s end may contribute even more—up to $11,250 in additional “catch-up” contributions. The changes also affect SIMPLE IRAs, though with smaller limits.
2. Possible Tax Code Overhauls
With new leadership comes new legislation. Adding to the suspense, many provisions from our current Tax Cuts and Jobs Act (TCJA) are due to expire at the end of 2025. With a lot of conversation around a potentially sweeping (expensive) tax bill extension, be prepared for some congressional fireworks.
3. Expanded Roth Options
Lawmakers often turn to Roth accounts for immediate revenue (since contributions are non-deductible), so plan on seeing more Roth offerings on the horizon. We already have Roth SEP and SIMPLE IRAs thanks to the SECURE Act 2.0, and required Roth catch-up contributions are set to go into effect in 2026 for high-income earners. While my clients ask me if I see tax-free Roth’s going away anytime soon, I say keep an eye out for additional Roth opportunities as Congress looks for ways to boost revenue right now.
4. New and Updated Regulations
We FINALLY have clarity from the IRS that, starting in 2025, non-spouse Inherited IRA beneficiaries will have to take annual required minimum distributions (RMDs) during their 10-year payout window, if the deceased had already started taking RMD’s. This is a big deal and can’t be missed without paying a tax penalty. There are new rules unique to spouse beneficiaries as well, that can help lower or defer taxable RMD income to them.
For years, you’ve worked on building up retirement funds. And just as importantly, your focus should be shifting to tax-efficient withdrawal strategies. Why give away your retirement savings to taxes simply from lack of knowledge? With all these changes in play, 2025 could be your chance to fine-tune your approach and make the most of your retirement savings.
The information contained herein is general in nature and offered only for educational purposes. No investment decisions should be based upon this content. This information is not a substitute for engaging MWM for a personal consultation whereby all of your financial circumstances, risk tolerance and investment objectives can be considered.
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