Individuals who are currently contributing to a 401(k), 403(b), and 457 plans are now able to contribute an additional $500 as the maximum elective deferral for retirement plans has increased to $23,500. Additionally, as a part of the Secure 2.0 Act individuals who are aged 60 through 63 can participate in a new additional catch-up contribution totaling $11,250. There will still be a catch-up offering for those beginning at the age of 50 with this catch-up contribution being capped at $7,500.
The annual gift exclusion amount also experienced a ratcheting up from $18,000 to $19,000. This annual gift exclusion allows individuals to gift to heirs without utilizing their lifetime unified tax credit. This lifetime unified tax credit increased to $13,990,000 in 2025 from last year’s amount of $13,610,000. Unfortunately, this higher unified tax credit amount which was created in the 2017 Tax Cut and Jobs Act is set to sunset at the end of 2025. We at Syverson Strege will continue to monitor the status of this sunsetting and provide guidance to clients based on how policy updates look as we progress throughout 2025.
On a lighter note, the maximum contribution to 529 plans for front-loading or super funding five years’ worth of gifts increased to $95,000. Note $95,000 doesn’t count against a person’s lifetime unified credit. For individuals contributing to 529 plans in Iowa and who are Iowa taxpayers, you can deduct up to $5,800 of your contributions per Beneficiary account. Please note that an individual can have multiple beneficiary accounts of which each would be eligible for this $5,800 deduction.
For more information on 2025 tax-related updates and how they impact into your comprehensive financial plan please reach out to your applicable Syverson Strege planner. As a remainder additional information can also be found on Syverson Strege’s website at OnlyWorkForYou.com or feel free to call us at (515) 225-6000.