Adding to Savings with an IRA

The contribution limit for IRAs remains $7,000 for 2025. The phase-out ranges also got a cost-of-living bump. These determine whether and how much of your IRA contribution is tax-deductible.

For 2025, the phase-out ranges are as follows:

• For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $126,000 and $146,000, up from between $123,000 and $143,000.
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $236,000 and $246,000, up from between $230,000 and $240,000.

Even if you can’t take the tax deduction, putting additional money into an IRA when you’ve maxed out your employer-sponsored plan can still be a terrific way to build retirement savings, without adding to your tax burden. IRA contributions grow tax-free, so you’ll have the benefit of being able to put your money to work without having to worry about capital gains taxes in the account, the way you would if you were saving in a taxable brokerage account.

You’re responsible for notifying the IRS that you’ve made an after-tax contribution. You do this by filing Form 8606. You’ll also need to keep careful records, or you may end up getting double-taxed when you withdraw funds in retirement.

The Spousal IRA

Whether you are eligible to take a tax deduction or not, if one spouse doesn’t have earned income it can make sense to set up a spousal IRA. This is just a regular individual IRA account held in the name of the spouse. The IRS requires income to contribute to an IRA, and the spousal IRA is the exception to that provision.

You may contribute up to the limit annually and can also make the catch-up contribution if over 50. The contribution limit remains at $7,000 in 2025. The catch-up contribution was amended under the SECURE Act 2.0 to include an annual cost-of-living adjustment, but remains unchanged at $1,000 for 2025. Continuing to contribute during periods when one spouse is not in the workforce allows for retirement savings to continue to grow, keeping retirement plans on track.

The Takeaway

Planning your retirement saving out in advance is a good way to make sure you are getting the most benefit. Reviewing your budget annually and adjusting your payroll contributions is a great way to ensure that your savings amount stays current with your income. Any increases in salary or decreases in other expenses such as paying down debt, may mean that you can increase retirement contributions. You can set up automatic deposits into an IRA so that you keep up a consistent cadence there too, which can give you the benefit of dollar-cost averaging into the market, as well as avoiding writing a bigger check at tax time.