IRA contribution limits for 2025: What you need to know

Planning for retirement starts with understanding how much you can contribute to your IRA each year. Since the IRS updates these limits annually to keep up with inflation, staying informed is key to making the most of your savings.

In 2025, IRA contribution limits have changed again, giving you another chance to maximize your tax-advantaged savings. Whether you’re contributing to a Traditional IRA or a Roth IRA, knowing these limits can help you stay on track with your retirement goals.

Let’s break down the 2025 IRA contribution limits, what they mean for you, and how you can make the most of them while staying compliant.

Traditional & Roth IRA contribution limits for 2025

The IRS has set the following limits for IRA contributions in 2025:

• Under age 50: $7,000 per year
• Age 50 & older (Catch-up contribution): $8,000 per year (includes a $1,000 catch-up bonus for those 50+)

These limits apply across all your IRAs meaning if you have both a Traditional and Roth IRA, the total contribution across both accounts cannot exceed $7,000 (or $8,000 if you’re 50+).

How these limits affect different types of IRAs

Traditional IRA contribution rules

• No income limits: Anyone earning an income can contribute.
• Potential tax deductions: Your contributions might be tax-deductible, but it depends on your income and whether you have a workplace retirement plan.
• Tax-deferred growth: You won’t pay taxes on your savings until you withdraw them in retirement.

Roth IRA contribution rules (Income restrictions apply)

• After-tax contributions: You contribute money that’s already been taxed, so you won’t get a tax deduction now.
• Income limits apply: If you earn above a certain amount, your contribution limit may be reduced or eliminated.
• Tax-free withdrawals: In retirement, your withdrawals are completely tax-free, as long as you follow IRS rules.

Choosing between a Traditional or Roth IRA depends on your income, tax situation, and long-term financial goals. Knowing these rules can help you make the best decision for your future.

What happens if you contribute more than the IRA limit?

Exceeding the IRA contribution limits can result in IRS penalties, so it’s crucial to stay within the allowed limits.

IRS penalty for excess contributions

• The IRS imposes a 6% penalty on any amount contributed over the limit.
• This penalty applies each year the excess remains in your account.

How to fix an excess contribution

• Withdraw the excess: You can remove the extra amount before the tax filing deadline (April 15, 2026, for 2025 contributions) to avoid the penalty.
• Apply it to next year: In some cases, the IRS allows you to apply the excess to the following year’s contribution—just make sure it doesn’t put you over next year’s limit.

Spousal IRAs: How non-working spouses can contribute

Many people don’t realize that non-working spouses can still contribute to an IRA—thanks to the spousal IRA rule.

• If one spouse earns income and the other does not, the non-working spouse can contribute to an IRA under their name.
• The working spouse’s income must be at least equal to the combined contributions.
• The standard IRA limits ($7,000 or $8,000 if 50+) still apply per spouse.

This allows married couples to double their retirement savings—potentially contributing $14,000-$16,000 per year combined.

Can you contribute to both a Traditional and Roth IRA?

Yes! You are allowed to contribute to both a Traditional IRA and a Roth IRA in the same year. However, there is a catch—the total amount you contribute across both accounts can’t exceed the annual limit. For 2025, that is $7,000 (or $8,000 if you’re 50 or older).

Here is how it works:

• If you contribute $4,000 to a Traditional IRA, you can only contribute $3,000 to a Roth IRA (assuming you’re under 50).
• If your income is too high for Roth IRA contributions, you can put the full amount into a Traditional IRA instead.

This strategy allows investors to balance their tax benefits—using the Traditional IRA for upfront tax deductions and the Roth IRA for tax-free withdrawals in retirement.

How to Open an IRA account on Public.com

Public is an investor-friendly platform that simplifies the process of opening and managing IRA accounts. Whether you’re looking to build long-term retirement savings or roll over an existing IRA, Public.com offers a transparent and easy-to-use experience. Here’s how to get started:

1. Sign Up for an IRA account on Public

To open an IRA, visit Public.com or download the Public app on iOS or Android. The platform provides a seamless onboarding process, guiding you through account setup and helping you understand your investment options.

2. Fund Your IRA Account

Once your IRA is set up, you can start contributing by:

• Linking a Bank Account: Transfer funds securely via ACH or debit card.
• Rolling Over an Existing IRA or 401(k): If you have a retirement account with another provider, Public.com supports rollovers, allowing you to consolidate and manage your investments in one place.

3. Set Up Contributions for Long-Term Growth

To stay on track with your retirement savings goals, you can choose:

• One-Time Deposits: Make individual contributions whenever it fits your financial plan.
• Automatic Contributions: Set up recurring deposits to ensure consistent contributions over time, helping to maximize potential tax benefits and long-term growth.

4. Invest and Manage Your IRA with Public.com

Public offers a user-friendly platform to help you build and manage a diversified retirement portfolio. You can invest in:

• Stocks, ETFs, and Bonds to align with your risk tolerance, investment horizon, and long-term retirement goals.
• Research and Analytical Tools that provide real-time market data, expert insights, and community discussions to support informed decision-making.

5. Monitor Your Retirement Progress

Public provides an intuitive dashboard where you can:

• Track investment growth and make adjustments as needed.
• Stay informed with real-time market data, analyst insights, and community discussions.
• Align your strategy with long-term retirement planning goals.

By leveraging Public’s platform, investors can efficiently manage their Traditional IRA and Roth IRA accounts, take advantage of tax-deferred growth, and build a strong foundation for retirement. Get started today!

Final thoughts: Maximize your IRA contributions in 2025

The IRA contribution limits for 2025 offer more room to save for retirement, especially with the increased limits. Here are few ways to make the most of your IRA:

• Contribute as much as possible – Investing more means maximizing your benefit from tax-advantaged growth for the future.
• Stay within the limits – Over contributing can lead to penalties, so be mindful of the annual cap.
• Explore a spousal IRA – If you’re eligible, this can help you and your spouse save even more for retirement.
• Start early – The sooner you invest, the longer your money has to grow with compound interest.

Ready to open or contribute to your IRA? Start building your retirement savings by Opening an IRA on Public.com today