What Do the 2025 Contribution Limits Mean for Dental Retirement Plans?

At a glance

• The main takeaway: The Internal Revenue Service (IRS) raises contribution limits for retirement plans every year due to inflation. For 2025, the contribution limit has increased to $23,500 from $23,000 in 2024.
• Impact on your business: The new contribution limit presents excellent opportunities for dental practice owners and practitioners to save more for retirement and take advantage of tax-reduced healthcare benefits.
• Next steps: Aprio’s Dental Team can help make sure you have a retirement plan in place, think about long-term investment, and prepare for life after dentistry. 

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The full story:

The Internal Revenue Service (IRS) raises contribution limits for retirement plans every year due to inflation. For 2025, the contribution limit has increased to $23,500 from $23,000 in 2024. 

The new contribution limit presents excellent opportunities for dental practice owners and practitioners to save more for retirement and take advantage of tax-reduced healthcare benefits. Our latest article breaks down the 2025 contribution limit changes and next steps for dentists looking to boost their retirement savings.

Key 2025 contribution limit changes

Individuals who set aside contributions for their 401(k), 403(b), and the federal government’s Thrift Savings Plan can now contribute up to $23,500 from $23,000 in 2024. 

Furthermore, individuals aged 50 or older can contribute an additional $7,500 — in catch-up contributions on top of the $23,500 —a total of $31,000. Additionally, there is a significant new age range for the catch-up: individuals between 60-63 can contribute up to $11,250 for a total of $34,750. The new catch-up contribution limit presents a solid opportunity to increase your nest egg as you approach retirement.

When it comes to the SIMPLE IRA, the contribution limit has increased to $16,500. The catch-up contribution limit for individuals 50 or older remains $3,500. For SEP IRA plans, the contribution limit has increased to $70,000.

The annual limit for profit-sharing plans has also increased to $70,000. In addition, the health savings account (HSA) contribution limit has increased to $8,550 for family coverage and $4,300 for individual coverage. For individuals 55 and over, whether individual or family coverage, the catch-up contribution stays the same at $1,000.

The limit for IRA contributions remains at $7,000, but the catch-up contribution allows individuals 50 or older to contribute an extra $1,000 for a total of $8,000.

What does this mean for dental practice owners and practitioners?

The 2025 contribution limit changes can give dental practice owners and practitioners more bandwidth to save for retirement, which is essential as they get closer to their non-income-earning years. Contributing more cash to your retirement plan is not just about setting aside money for the future; it’s also a smart tax and investment decision. In many cases, retirement plan contributions are tax-deferred, which means the full amount gets invested, where it can compound and grow — with no tax taken out.

A well-executed plan can give you a stronger sense of financial stability, making sure that you have the resources you need between now and retirement. What’s more, a solid retirement plan can be a smart talent retention and attraction tool, one that will help increase the chances of your employees staying with your practice over the long term.

Retirement plan recommendations depends on your dental practice journey

If you are a new dentist with a startup practice, your primary focus is likely establishing your business and getting on solid financial footing. The first few years of practice may present many expenses, such as recruitment, clinic rent, and networking, which leaves little to start up a 401(k) plan. Conversely, a Roth IRA or a SIMPLE IRA can be good option as a low-cost starting point for saving and investing while your practice grows and becomes more profitable.

When you and your practice are more established, you may consider investing in a 401(k) plan and potentially layering it with a profit-sharing plan. When you’ve reached high-earner status and leveraged other investment options, you may also consider implementing a cash balance plan.

The best first step you can take is to connect with a trusted, industry-specific CPA or professional advisor, who can help determine which retirement plan is the most beneficial to you in your current situation and most suitable for achieving your goals.

What’s next?

With the Tax Cuts & Jobs Act (TCJA) sunsetting at the end of 2025, many provisions will return to their prior limits. Moreover, an almost 50% decrease in the standard deduction and an increase in individual income tax rates will primarily affect doctors — now is the time to enlist a professional advisor’s help with estate planning and preparing for the tax changes ahead.

The bottom line

Securing your financial future beyond your dental practice is essential. Your ultimate goal is to build wealth that supports you post-dentistry and prepares you for a comfortable retirement.

No matter where you are in your dental practice journey, it’s always a good idea to understand your retirement plan options and how they could benefit you and your practice in the future. Aprio’s Dental Team can help make sure you have a retirement plan in place, think about long-term investing, and prepare for life after dentistry.

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IRS – 401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000