It’s the beginning of March, which means that in a little over a month, we will all need to finish filing our federal income taxes.
Still Time to Take Advantage of 2025 Tax Breaks for Retirement Savings
With that, I want to remind you that although calendar year 2025 is in the rear-view mirror, the IRS still allows you to make contributions to eligible Traditional IRAs, Roth IRAs, and Health Savings Accounts (HSAs) for 2025, up until the federal income tax filing deadline of Wednesday, April 15, 2026.
2025 Annual IRS Limits1,4 | Individual/ Self-Only Plan | Spouse/ Family Plan | Age 50 & Older Catch Up | Age 55 & Older Catch Up |
Traditional + Roth IRA’s (combined) | $7,000 | - | $1,000 | - |
Spousal IRA’s | - | $7,000 | $1,000 | - |
HSA’s | $4,300 | $8,550 | - | $1,000 |
Why Should You Care?
For most individuals, it will take significant resources in retirement to supplement Social Security and Medicare to achieve the standard of living that people want. The government provides tax breaks on certain accounts to encourage saving for retirement to meet these needs.
Caution! Twists and Turns Ahead
Although the limits above seem easy enough to follow, the actual rules are a lot more complicated. Here are some key nuances to keep in mind.
IRAs
- Contribution amounts are reduced if your earned income is lower than the limit.
- Contributions to Spousal IRAs can be made based on the other spouse’s earned income.
- Your ability to take a tax deduction for a Traditional IRA contribution is limited if you, or your spouse, is covered by a workplace retirement plan and your modified adjusted gross income is above certain thresholds.2 (see Sources below)
- Your ability to contribute to a Roth IRA is limited if your modified adjusted gross income is above certain thresholds.3 (see Sources below)
HSAs4
- To contribute, you must be covered by an HSA-Eligible Health Plan (e.g., Qualified High Deductible Health Plan – QHDHP) and meet certain other requirements.
- Contribution limits are generally prorated if you are not covered by a QHDHP for all 12 months.
- Contribution limits are determined by health insurance coverage (self-only vs. family) not by tax filing status or marital status alone.
- The limits above include any contributions made by your employer, which reduces what you can contribute.
I already filed my 2025 taxes. ☹
Not to worry. File an amended return using Form 1040X, Amended U.S. Individual Income Tax Return to make changes to your return.
Got Questions?
Please reach out to me for assistance with, or questions about, opening a Traditional IRA, Roth IRA, or HSA to help you attain your retirement savings goals.
Thank you!
Sources:
2,3https://www.irs.gov/publications/p590a
4https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The discussion herein is general in nature and is provided for informational purposes only.
Regards,
Robert H. Pfahl, CFP®, QKA®
Wealth Advisor & Retirement Plan Consultant
Email: robert@acornretire.com
Phone: (814) 360-3295
Mail: 476 Rolling Ridge Drive, Suite 333, State College, PA 16801
Web: www.acornretire.com
Advisory services offered through Vicus Capital, Inc., a federally registered investment advisor. Vicus Capital does not accept any trade instructions via email or voicemail. To initiate a transaction, please contact Vicus Capital directly at 1-855-55VICUS.