Roth 401(k) And Roth IRA Contribution Limits 2025 Maximize Retirement

For retirement savers, particularly those over 50, you should evaluate ways to reach the 2025 Roth 401(k) and Roth IRA Contribution Limits. As you may know Roth accounts provide tax-free growth and withdrawals in retirement. However, income limits may prevent some high earners from contributing directly.

In 2025, contribution limits have increased, and retirement savers have multiple ways to optimize their savings—including leveraging pre-tax 401(k) contributions to reduce taxable income or maximizing a Designated Roth Account (aka Roth 401(k) ) to maximize their tax-free retirement accounts.

This article explores how high income savers can leverage a 401(k) and possibly a Health Savings Account qualify for a Roth IRA and build a tax-efficient retirement plan, even at higher income levels.

I love Roth savings because it takes care of the taxes today. It also removes the impact of 401(k) and IRA withdrawals, increasing your income enough to kick in Medicare surcharges. You pay your mortgage from your checkbook, meaning with dollars that have been taxed. This assumes that your income is primarily W-2 income. The Roth IRA contribution is paid from checkbook money. In the case of a Roth 401(k) the Roth account is also paid after taxes have been paid. In this case, your payroll provider facilitates the transaction rather than you and your bank.

After you have satisfied the 5-year holding rule and attained age 59 ½, you never have to worry about how taxes are going to effect your use of the money. This is the opposite of the 401(k) and IRA experience.

Maximizing a Designated Roth Account 401(k) for Tax-Free Growth

If your income is too high to qualify for a Roth IRA, another option is contributing to a Roth 401(k) (if available through your employer). A Roth 401(k) allows you to save $23,000 in 2025. If you are over 50 that increases by $7,500 to $30,500. Those who are between the ages of 60 to 63 are able to add an additional $5,000 to $34,250.

Elective Deferrals [401(k), 403(b), 457]

• Contribution Limit: $23,500
• Catch Up (Age 50+): $7,500
• Catch Up (Ages 60-63): $11,250 [3750 + $7,500 (Age 50+ Catch Up)]

Key Benefits:

• No income limits: Unlike a Roth IRA, anyone can contribute.
• Higher contribution limits: In 2025, you can contribute $23,000 (under 50) or $30,500 (over 50) and $34,750 between the ages of 60 and 63.
• Tax-free withdrawals: Unlike a traditional 401(k), qualified withdrawals are completely tax-free in retirement. Example:
  • A single filer, age 50 and older earning $250,000 cannot contribute to a Roth IRA.
  • They can max out a Roth 401(k) at $30,500 (Ages 60 to 63 $34,250).

When you separate from service you will be able to rollover this account into a Roth IRA. This will be important if you want to effect Roth conversions and were unable to save into a Roth IRA before the Roth IRA income limits phased you out.

Roth IRA Contribution Limits for 2025

Standard Contribution Limit

The IRS sets annual Roth IRA contribution limits, which adjust for inflation. In 2025, the contribution limits are:

• Under Age 50: $7,000
• Over 50 (Catch-Up Contribution): $8,000 ($7,000 + $1,000 catch-up)

Income Limits and Phase outs for Roth IRA Contributions

Not everyone can contribute directly to a Roth IRA. The IRS sets Modified Adjusted Gross Income (MAGI) limits that determine eligibility. Below highlights the difference between filing taxes Single, or Married Filing Jointly, specifically:

Understanding How Modified Adjusted Gross Income (MAGI) Income Affects Roth IRA Contribution Limits

MAGI is a crucial number for Roth IRA eligibility. It is calculated by:

1. Taking Adjusted Gross Income (AGI) from your tax return.
2. Adding back certain deductions (e.g., student loan interest, foreign earned income exclusion).

If your MAGI is too high, you won’t be able to contribute directly to a Roth IRA—but there are alternative strategies to maximize tax-free retirement savings.

Strategies to Qualify for the Roth IRA Contribution Limits

Using a Pre-Tax 401(k) to Lower MAGI

A pre-tax 401(k) contribution reduces income, potentially making Roth IRA contributions possible. Example:

• A 55-year-old single filer earns $160,000, which is above the Roth IRA phase-out limit.
• By maxing their pre-tax 401(k) contributions ($30,500 in 2025), they lower their MAGI to $129,500.
• Now, they are fully eligible for a full $8,000 Roth IRA contributions.

Using a Health Savings Account to Reduce Gross Income

Make a pre-tax Health Savings Account Contribution of $8,550. This also comes with the same tax free growth of the Roth IRA and tax free withdrawals, as long as it used for healthcare expenses. Employees 55 and older, can an additional $1000 kicker. This money can be invested to be used to pay health care expenses in retirement tax free.

More Examples of how to Hit the Roth IRA Contribution Limits

Example 1: Single Filer Earning $150,000

• MAGI before deductions: $150,000
• 401(k) contribution (pre-tax): -$30,500
• Adjusted MAGI: $119,500 → Fully eligible for Roth IRA

Example 2: Married Filing Jointly with one working spouse, $260,000 Income

• 401(k) contributions (both spouses maxing out pre-tax): -$30,500
• Adjusted MAGI: $229,500 → Each spouse is fully eligible for Roth IRA

Example 3: Married Filing Jointly with $300,000 combined Income

• 401(k) contributions (both spouses maxing out pre-tax): -$61,000
• Adjusted MAGI: $239,000 → Over Roth IRA income limit
• Make a Health Savings Account Contribution of $8550.
• Adjusted MAGI: $230,450 → Fully eligible for Roth IRA

Final Thoughts on Reaching the Roth IRA Contribution Limits

Rather than just think about Roth IRA Contribution limits, consider Roth limits. We’ve seen that the Roth 401(k) has a higher limit than the Roth IRA for all ages. If you are 60 to 63 the Roth 401(k) offers a savings limit of $34,750. If you want to add the Roth IRA Contribution max of $8000 then you’ll need to get your income below the phaseout amount. That can be accomplished by saving in either a Health Savings Account or by saving in the 401(k) instead of the Designated Roth Account inside of the 401(K). Using a Roth Conversion, you can subsequently convert those amounts into your Roth IRA.

Hitting the Roth IRA Contribution limits may not be necessary for your financial goals. For a personalized Roth IRA strategy, consult a Certified Financial Planner, CPA or other designated financial professional to navigate income limits, tax implications, and long-term retirement goals. I recommend verifying their credentials with appropriate governing bodies just to be safe. You can Verify a CFP here and a CPA or Enrolled Agent here.