Ramp up your savings strategy

Lessen your tax liability through retirement contributions

One of the easiest and most effective ways to accumulate tax-deferred savings is through contributions to an employer-sponsored retirement plan, such as a 401(k), 403(b)¹ or governmental 457(b). These pre-tax contributions reduce your current taxable income and thereby lower your current tax bill. 

Some employers offer a match—adding money to your retirement plan equal to a percentage of your contributions. Additionally, if you are age 50 or older, you can make annual catch-up contributions to IRA accounts and many retirement plans—allowing you to put away even more money for retirement. 

If you’re not participating in your employer’s retirement plan, you may be passing up a valuable retirement savings opportunity.

Consider contributing to a retirement plan at work

Here’s an overview of retirement plan contribution limits for 2025. Of course, such limits are subject to the provisions of your company’s plan. 
 

*Note: Special additional catch-up contributions may apply for 403(b) plans. Under SECURE 2.0, beginning in 2025, individuals ages 60-63 will be eligible for increased catch-up contributions to 150% of the regular catch-up amount.
 

Consider contributing to an Individual Retirement Account (IRA)

You may want to consider maximizing your contributions to a Traditional IRA as another strategy for potentially reducing your taxable income—and your taxes—as you build assets for retirement. These contributions also grow tax-deferred.²

Another type of IRA to consider is the Roth IRA. While contributions are not tax deductible, qualified withdrawals are generally tax-free. Please talk to your financial and tax professional to learn more about the Roth IRA.

Determine the deductibility of your contribution

If you plan on contributing to a Traditional IRA, your financial and tax professionals can help you determine if you may be able to deduct all or a portion of the money you contribute. For a general idea, consider these current IRA deduction limits, which assume you are covered by a retirement plan at work. (Note: Deduction limits are less stringent if you are not covered by a retirement plan at work.)

• If your filing status is single or head of household and your modified adjusted gross income is less than $89,000, you may be able to take a full deduction or a partial deduction.

• If your filing status is married filing jointly and your modified adjusted gross income is less than $146,000, you may be able to take a full deduction or a partial deduction.

For complete details about your specific situation, please talk to your tax professional or visit irs.gov.

Take action for your financial future

As you prepare for your financial future, it may make sense to periodically review your retirement savings and investment strategies from a tax perspective.

• Identify tax-smart strategies with your financial and tax professionals. They can be good resources for evaluating your tax liabilities and potentially identifying ways of reducing your tax burden in the future.

• Take advantage of tax-deferred savings by increasing retirement account contributions today if it makes sense for you and your personal situation.

Action is everything. Talk to your financial and tax professionals about tax-smart strategies for retirement today.

¹ Keep in mind, the purchase of an annuity within a retirement plan or account does not provide additional tax-deferred treatment of earnings. However, annuities do provide other features and benefits that may be important to you, including options for guaranteed lifetime income and a guaranteed death benefit for your beneficiary.

² Withdrawals are subject to ordinary income tax and, if taken prior to age 59½, an additional 10% federal tax may apply.