Retirement planning isn’t just about saving – it’s about strategy.
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Quick Tax Tip
With Art Werner
CPE Today
With tax laws constantly evolving, finding the right balance between financial planning, tax reduction, and compliance with the Internal Revenue Code can feel like a moving target. Fortunately, powerful opportunities are available in 2025 to maximize your retirement savings while minimizing your tax burden.
For instance, contribution limits to 401(k)s have significantly increased. In 2025, you can contribute up to $23,500; if you’re 50 or older, you can add an extra $7,000 in catch-up contributions. That’s a major opportunity to secure your financial future while reducing your taxable income today.
But should you contribute to a Roth 401(k), a traditional 401(k), or other savings account?
A Roth 401(k) allows the account holder to pay taxes now to enjoy tax-free withdrawals later, while a traditional 401(k) defer taxes until retirement. The answer depends on your income bracket, future tax expectations, and long-term financial goals.
Self-employed individuals have even more strategic options. A SEP IRA offers a simple yet powerful way to contribute significantly to retirement savings without burdensome compliance requirements. Alternatively, a solo 401(k) allows for lump-sum contributions, making it an excellent option for those looking to maximize tax-advantaged growth.
No matter your financial situation, proactive tax planning can make all the difference. If you’re expecting a tax refund this year, why not reinvest it into your retirement plan for next year? It’s an easy way to put “found money” to work for your future.
One Response to “Art Werner: Maximize Retirement for 2025 | Quick Tax Tip”
ROGER ROTOLANTE
This update for 2025 is a very confusing. It does not cover making IRA contributions in addition to a 401K contribution.