Your 2025 Retirement Improvement FAQs: What I Tell My Clients

For 2025, the contribution limits are:

• IRA: $7,000 (plus a $1,000 catch-up if you’re age 50+)
• 401(k): $23,000 (plus a $7,500 catch-up if you’re 50+)

If you’re self-employed, you may also contribute to a Solo 401(k) or SEP IRA, potentially deferring tens of thousands of dollars based on your income.

Here’s what I tell clients: If you’re behind on saving, these catch-up provisions are your best opportunity to close the gap fast — use them.

It depends on your current and future tax brackets. Roth conversions can be smart if:

• You’re in a lower-than-usual tax year
• You want to reduce future Required Minimum Distributions (RMDs)
• You want tax-free growth and withdrawals later

But remember: Converted amounts count as income in the year of conversion, so timing and partial conversions are key.

Client example: A client who retired at 64 converted $100,000 to a Roth across three low-income years, saving over $15,000 in future taxes.

Starting in 2025, the RMD age is 73, as set by the SECURE Act 2.0. This applies to:

• Traditional IRAs
• 401(k)s
• 403(b)s
• Inherited accounts (with special rules)

The penalty for missing an RMD is now 25% (down from 50%), but that’s still a steep price to pay. RMDs don’t apply to Roth IRAs during your lifetime.

There’s no one-size-fits-all, but a common tax-efficient sequence is:

• Taxable brokerage accounts (to realize long-term capital gains)
• Traditional IRAs / 401(k)s (when RMDs kick in or when income is low)
• Roth IRAs (saved for later, tax-free growth)

The goal is to balance income levels across retirement and avoid bracket jumps.

CPA Insight: One mistake I see all the time is retirees pulling only from IRAs early on and then hitting massive RMDs later. A mixed-withdrawal strategy smooths taxes.

Yes — as long as you have earned income, you can contribute to:

• A Traditional or Roth IRA (up to the limit)
• Your employer’s 401(k), if offered
• A Solo 401(k) or SEP IRA if you’re self-employed

Your total contributions can’t exceed your earned income for the year.

For each year you delay past full retirement age (FRA), your benefit increases by 8% per year, up to age 70.

Delaying may be wise if:

• You’re healthy and expect longevity
• You have other income to live on
• You want to maximize survivor benefits for a spouse

Client example: A couple waited until 70 and 68 to claim. Their combined benefits rose by nearly $800/month for life.

In many cases, yes — especially if you expect your tax rate to be higher in retirement. The SECURE Act 2.0 now allows:

• Roth employer match options
• No RMDs from Roth 401(k)s starting in 2024

But if you’re in a high-income phase, the tax deduction from traditional contributions may still make sense. Many clients do a blend of both.

Yes. There’s no age limit anymore for contributing to:

• Traditional IRAs (if you have earned income)
• Roth IRAs, subject to income limits
• Employer plans like 401(k)s

This allows older workers to keep saving — and potentially reduce taxable income — while working longer by choice or necessity.

It depends on your:

• Cash flow
• Interest rate
• Emotional comfort with debt

If your mortgage rate is under 4% and you’re earning 6–8% on investments, you may be better off keeping the mortgage and investing the difference.

Here’s what I tell clients: There’s no wrong answer — only what keeps your budget balanced and your mind at peace.

If you own your home and make energy-efficient upgrades, you may qualify for:

• Up to $1,200 per year for heat pumps, insulation, doors, windows
• Up to $3,200 total in combined credits
• 30% credit for solar installations and other renewables

These credits reduce your tax bill, even if your income is lower in retirement — though they don’t carry forward like deductions.

You can exclude up to:

• $250,000 of capital gains if Single
• $500,000 if Married Filing Jointly

To qualify:

• The home must be your primary residence
• You must have owned and lived in it for at least two of the last five years

If you’ve downsized or moved to assisted living, plan carefully to keep this benefit.

Medicare premiums are based on your Modified Adjusted Gross Income (MAGI) two years prior. Exceeding thresholds triggers IRMAA surcharges.

Strategies to manage MAGI:

• Roth conversions before Medicare kicks in
• Using QCDs to reduce RMD income
• Harvesting gains in low-income years

Client example: A client strategically managed conversions to stay under the IRMAA tier, saving $1,500/year in Medicare premiums.

Yes — if you’re age 70½ or older, you can give up to $105,000 per year directly from your IRA to a charity.

This:

• Counts toward your RMD
• Doesn’t increase your AGI
• Keeps Social Security and Medicare thresholds lower

It’s one of the best tools for charitably inclined retirees.

At least once per year, or after major market swings. Rebalancing:

• Keeps your risk aligned with your goals
• Prevents overexposure to a single asset class
• Can be done tax-efficiently using IRAs or 401(k)s

Use market dips or rallies to adjust, and always tie your investment strategy to your retirement timeline.

Key documents include:

• Will and/or revocable trust
• Financial and healthcare powers of attorney
• Updated beneficiary designations on IRAs, 401(k)s, HSAs, and insurance

You may also consider Roth conversions and lifetime gifting strategies to reduce estate taxes, especially if the exemption drops after 2025.