2025 Retirement Rule Changes What They Mean for Your Retirement | The Limitless Retirement Podcast

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The 2025 Retirement Plan Changes: What You Need to Know

How These New Rules Could Impact Your Future Savings

Retirement planning is about to undergo a major shift in 2025, bringing both new opportunities and potential challenges for savers. Whether you're just starting out, in your peak earning years, or already retired, these changes could significantly impact how you save, invest, and withdraw from your retirement accounts.

Understanding these updates is crucial for maximizing your savings, optimizing tax advantages, and securing a financially stable retirement. Let's break down the most significant changes and how they may affect you.

1. Higher Contribution Limits for Retirement Plans

One of the biggest updates coming in 2025 is an increase in contribution limits for various retirement accounts. These increases may seem modest at first glance, but over time, they can have a significant impact on your long-term savings.

  • 401(k), 403(b), 457, and TSP Plans: Contribution limits will increase from $23,000 in 2024 to $23,500 in 2025. While this may not seem like a drastic change, that extra $500, invested with a 7% annual return, could grow to more than $20,000 over 20 years.
  • Catch-Up Contributions for Those Over 50: The additional contribution limit remains at $7,500, allowing individuals over 50 to contribute up to $31,000 in total.
  • Employer Matching and Profit Sharing Limits: The total combined contribution limit rises from $69,000 in 2024 to $70,000 in 2025 for those under 50, and up to $77,500 for those over 50.

Super Catch-Up Contributions for Ages 60-63

If you are between the ages of 60 and 63, you'll be eligible to contribute an additional $10,000 to your 401(k) or 403(b). This could be a game-changer for those nearing retirement and looking to accelerate their savings.

2. Expanded Access for Part-Time Workers

Historically, many part-time workers have struggled to gain access to employer-sponsored retirement plans. The new law lowers the eligibility threshold, making it easier to participate:

  • Current rule: You need to work 1,000 hours in a year or 500 hours per year for three consecutive years to qualify for a company plan.
  • New rule (2025): That three-year requirement drops to just two years, allowing more employees to start saving sooner.

3. Automatic Enrollment for New Retirement Plans

Any new 401(k) and 403(b) plans established after December 29, 2022, will be required to implement automatic enrollment.

  • Employees will be enrolled automatically at a 3% contribution rate, with annual increases of 1% until reaching between 10% and 15%.
  • Employees can still opt-out, but research shows that automatic enrollment significantly increases participation and long-term savings.

4. Roth IRA and SEP IRA Changes

Roth IRA Income Limits Are Increasing

  • Single filers can now contribute fully until their modified adjusted gross income reaches $165,000 (up from $161,000 in 2024).
  • Married couples filing jointly can contribute fully up to $246,000 (up from $240,000).

This is great news for those who were previously on the edge of income eligibility and now have greater access to tax-free retirement growth.

SEP IRA Contribution Limit Increases

  • The SEP IRA contribution limit increases to $70,000 in 2025 (from $69,000 in 2024), providing business owners with more tax-advantaged savings opportunities.

5. Stricter Rules for Inherited IRAs

If you inherited an IRA after 2020, be aware that the IRS is tightening penalties for missing required distributions:

  • The penalty for missing an RMD (Required Minimum Distribution) will increase to 25% of the amount that should have been withdrawn.
  • If corrected within two years, this penalty may be reduced to 10%.

For heirs managing an inherited IRA, careful planning will be necessary to avoid unnecessary tax penalties.

6. Increased Health Savings Account (HSA) Limits

HSAs are a powerful but often underutilized retirement planning tool. In 2025, contribution limits are increasing:

  • Individuals: $4,300 (up from $4,150 in 2024)
  • Families: $8,550 (up from $8,300 in 2024)
  • Additional Catch-Up for 55+: $1,000 remains unchanged

HSAs offer a triple tax advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses—making them an essential tool for retirement healthcare planning.

7. New Emergency Savings Features

To help prevent early withdrawals from retirement accounts, emergency savings accounts will now be allowed within employer-sponsored plans.

  • Employers can offer emergency savings accounts directly linked to a 401(k) or 403(b).
  • These accounts provide a safety net for unexpected expenses, reducing the likelihood of early retirement withdrawals and the associated tax penalties.

Additionally, starting in 2025, individuals will be able to withdraw up to $1,000 from their retirement accounts for emergencies without facing the usual 10% early withdrawal penalty.

8. Student Loan Matching Contributions

Starting in 2025, employers will be allowed to match student loan payments with contributions to an employee’s retirement account.

  • If you’re paying $300 per month on student loans, your employer can match that amount in your 401(k) or 403(b).
  • This is an excellent way for young professionals to build retirement savings while managing student debt.

9. Mandatory Roth Catch-Up Contributions for High Earners

For high-income earners ($145,000+ from a single employer), starting in 2025:

  • Any catch-up contributions must be made as Roth contributions.
  • This means paying taxes on contributions upfront, but benefiting from tax-free withdrawals in retirement.
  • While this may initially feel like a disadvantage, building tax-free retirement income can be a smart long-term move.

Final Thoughts: What Should You Do Now?

The 2025 retirement plan changes introduce new opportunities to save more, optimize taxes, and plan better for your financial future. However, they also require careful strategy and planning.

To ensure you're on track, consider:

✅ Reviewing your retirement contributions and maximizing your savings

✅ Assessing whether Roth contributions are right for you

✅ Planning for inherited IRA distributions to avoid penalties

✅ Exploring HSAs and emergency savings as part of your overall plan

✅ Working with a financial advisor to navigate these changes and create a personalized strategy

At Gudorf Financial Group, we specialize in helping individuals over 50 make the most of their retirement planning opportunities. Schedule your free retirement assessment today to see how these changes impact your unique situation.

*This blog post is based on the insights shared by Gudorf Financial Group. For personalized advice tailored to your unique circumstances, always consult a financial, legal, or tax professional.*

Transcript: Prefer to Read — Click to Open

Danny (00:00.098)

The retirement landscape is about to undergo significant changes in 2025, and these updates could substantially impact your future retirement. Whether you’re in the early stages of your career or approaching retirement, understanding these changes is crucial for optimizing your retirement strategy. As a financial planner who’s helped hundreds of clients navigate retirement planning,

I’m going to break down these important changes and explain exactly how they might affect your retirement. Hello, my name is Danny Gudorf and I’m a financial planner and owner of Gudorf Financial Group. Let’s start with what’s happening to workplace retirement plans right now. The backbone of most Americans saving strategy. In 2024, you could contribute up to $23,000 to your 401k

403B, 457, or TSP plan. Now, in 2025, this limit has increased by $500 to $23,500. While this might seem like a modest increase, it’s important to understand the long-term impact of even small changes in your retirement plan contributions. Over 20 years, that extra $500 annual contribution, assuming

you get a 7 % average annual return could grow to more than $20,000 in additional retirement savings. For those of you who are over 50, the catch-up contribution limit remains the same at $7,500 for 2025. This means you could potentially contribute up to $31,000 to your workplace retirement plan in the year 2025.

This applies whether you’re making traditional pre-tax contributions or whether you want to make those contributions as Roth contributions. It’s worth noting that this opportunity to contribute additional funds in your later working years can be a powerful tool for boosting your retirement savings when you’re likely at your peak earning years. One of the most significant changes affects the combined contribution limits.

Danny (02:26.893)

with employer matching and profit sharing piece. The limit on these types of plans jumps from 69,000 in 2024 to $70,000 in 2025. For those of you who are over 50 and are in this type of plan, whether you’re a business owner or not, that brings the total possible contribution, including catch up to 77,500.

This increase is particularly relevant for high income earners and those of you who are considering mega backdoor Roth conversion strategies. Now, let’s discuss one of the most intriguing changes coming in 2025. The introduction of what’s called the super catch up contribution. This provision established by the Secure Act 2.0 creates a unique opportunity for those between the ages of 60

and If you fall within this age range, you’ll be eligible to contribute an additional $10,000 to your 401k or 403b plan. While this extra contribution allowance is certainly beneficial, the narrow age window raises some interesting questions about the retirement policy designed for these super catch-up contributions. From my experience working with clients in this age range, I’ve found that having more

contribution flexibility in the year’s preceding retirement can make a significant difference in their retirement readiness. For part-time workers, 2025 brings welcome changes that could dramatically impact your retirement savings potential. The eligibility requirements for joining company retirement plans are becoming more inclusive. Currently, you need either 1,000 hours in a single year

or 500 hours over the last three consecutive years to be able to participate. Starting in 2025, that three-year requirement drops to just two years. This change acknowledges the evolving nature of our workforce and provides more people with the access to employer-sponsored retirement plan benefits. A particular significant development

Danny (04:49.837)

affects all new and 401k and 403b plans established after December 29 of 2022. These plans must implement automatic enrollment for eligible employees unless they specifically opt out of the plan. The initial contribution rate will be at least 3 % with automatic annual increases to 1 % until reaching between 10 and 15%.

From my years of experience helping clients plan for retirement, I’ve observed that automatic enrollment is one of the most effective ways to help people start saving early. It removes the psychological barriers to getting started and help creates a positive saving habit for those employees. For my self-employed clients, the Solo 401k changes in 2025 present some exciting news.

As both employer and employee, you can contribute up to $23,500 as an employee contribution plus up to 25 % of your compensation as an employer contribution. This brings the total possible contribution up to $70,000 for those of you under 50 and $77,500 for those of you over 50.

And if you’re in that special age from 60 to 63, you could potentially contribute up to $81,250. These higher limits create powerful tax planning opportunity for many business owners. Let’s shift our focus a little bit to individual retirement accounts such as IRAs, which remain a crucial component of many retirement strategies. While basic

IRA contribution limits will hold steady at 7,000 in 2025 or 8,000 if you’re 50 or older. There’s an important change that’s coming to Roth IRA income eligibility that could open the doors for many savers. The income thresholds are increasing. The single filers now able to fully contribute until

Danny (07:11.533)

Their modified adjusted gross income reaches 165,000 up from 161,000 in 2024. For married couples filing jointly, that threshold has increased to 246,000 from 240,000. This adjustment to income limits is particularly significant because Roth IRAs offer unique advantages in your retirement plan.

From my experience, working with retirees, having tax-free income options in retirement can be invaluable for managing your tax bracket and maximizing your social security benefits. If you’re currently just above the 2024 income limits, these new thresholds might allow you to add Roth savings to your retirement strategy. For business owners and self-employed individuals,

the SEP IRA landscape is also evolving. The contribution limit increases to 70,000 in 2025 up from the 69,000 in 2024, or 25 % of your compensation, whichever is less. While SEP IRAs don’t offer catch-up contribution like traditional IRAs, they provide excellent opportunities for business owners

to save significantly for retirement while managing their tax liability. I’ve seen many self-employed clients benefit from the flexibility and higher contribution limits of SEP IRAs. SEP IRAs also usually offer lower plan fees than some of the 401k and solo 401k plans. Now, let’s address one of the most crucial changes

that many people need to be aware of. New rules for inherited IRAs starting in 2025. The IRS is implementing stricter penalties for missed required distributions from inherited IRAs. This is particularly important if you’ve inherited an IRA since 2020. As these accounts are subject to the 10-year distribution rule, the penalty

Danny (09:34.359)

For missing, an RMD will be 25%, though it can be reduced to 10 % if you correct it within two years. This change represents a significant shift in how inherited retirement accounts must be managed. At our firm, I’ve seen how proper planning for inherited IRAs can make a substantial difference in tax efficiency and long-term wealth preservation for our clients.

It’s critical to understand these rules and plan accordingly, especially since the IRS previous leniency period is ending. Let’s turn our attention to what I consider one of the most powerful but underutilized retirement planning tools, the health savings account. In 2025, HSA contribution limits are increasing to $4,300 for individuals

and $8,550 for families, with an additional catch-up contribution of $1,000 available to those over 55 and older. As a financial planner who does retirement planning every day, I often emphasize to clients that HSAs offer a unique triple tax advantage. First, you can make tax-deductible contributions. They also get tax-free growth.

And if later on in retirement or if you have any medical expenses, you can take tax-free withdrawals for those qualified medical expenses. Let’s explore some of the newer features being introduced to retirement plans in 2025. Starting with emergency savings accounts. This innovative addition allows employers to offer emergency savings accounts linked directly

employees retirement plans. From my experience seeing clients, I’ve seen how unexpected expenses can derail their retirement savings, often forcing people to take early withdrawals from their retirement accounts. These new emergency savings accounts create a valuable buffer between your daily financial needs and your long-term retirement savings goals. Now, speaking of emergencies,

Danny (12:01.261)

The Secure Act 2.0 has introduced a more flexible approach to assessing retirement funds in times of need. Starting in 2025, you can withdraw up to $1,000 from your retirement account for emergency expenses without facing the typical 10 % early withdrawal penalty. However, it’s important to understand the repayment rules. You have three years to repay the distribution

and you cannot take another emergency withdrawal during that period unless you’ve repaid the first draw. While this provides a helpful safety net, I always advise clients to build an emergency savings outside of their retirement accounts whenever possible. Another change that’s coming in 2025 addresses a common challenge many young professionals face, balancing

their student loan payments with retirement savings. Employers will now be able to start matching contributions to a retirement plan based upon an individual’s student loan payments. This is a major change in development for those who are struggling to save for retirement also while paying off any education debt. For example, if you’re paying $300

a month towards student loans, your employer could potentially match that amount in your retirement account, even if you’re not making any direct contributions yourself. Now, let’s discuss what I consider one of the biggest changes today. Another change coming in 2025 is some new rules for catch up contributions. Let’s discuss

one major change that you need to be made aware of for any Roth accounts. Some new rules are coming down the pipeline and I don’t want you to be caught off guard. Starting in 2025, if your wages from a single employer exceed $145,000, any catch-up contributions to your 401k must be made as Roth contributions.

Danny (14:25.281)

This means you’ll pay taxes on these contributions upfront rather than getting an immediate tax deduction. Importantly, you won’t be able to make catch-up contributions to traditional pre-tax 401k accounts, only to those Roth 401k accounts. While this might seem like a disadvantage, it’s essential to consider the long-term benefits of this tax-free growth and withdrawals in retirement.

This change to catch-up contribution represents a fundamental shift in retirement saving strategies for higher income earners. For someone making catch-up contributions of $7,500 annually, this could mean paying several thousand dollars more in current year taxes. However, it also means building up a larger pool of tax-free money in retirement.

I’ve found that having a mix of these pre-tax and Roth savings accounts is extremely valuable in your retirement income planning. The upcoming changes to retirement plans in 2025 bring both new opportunities and potential challenges for retirement savers. While some updates like higher contribution limits and increased flexibility for accessing funds,

and emergencies offer greater savings potential. Others, such as the mandatory Roth catch-up contributions for high-income earners and tighter inherited IRA rules, demand careful consideration and strategic planning. At Goudor Financial Group, we specialize in helping individuals over 50 through these complex retirement planning decisions. We know these changes can feel overwhelming

but they also open up new possibilities to enhance your retirement plan. That’s why we offer a free retirement assessment. Together, we’ll review your current retirement plan and assess how the 2025 changes could affect your financial future and identify ways to minimize your taxes, optimize your investments, and ensure you’re on track for the retirement.

Danny (16:48.961)

you’ve always envisioned. can schedule your free retirement assessment today by clicking the link below or going to and visiting us at gudorffinancial.com forward slash get started. Remember, successful retirement planning isn’t just about keeping up with the changing rules. It’s about applying these rules strategically.

to your unique situation. The 2025 updates introduce new tools, but integrating them throughout your plan is key. If you found this information to be helpful, please like and subscribe to our channel for more retirement planning tips and insights. Click this video here if you want to learn more about how to reduce your taxes on Social Security benefits. Have a great day.

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