Internal Revenue Service building in Washington, D.C. Photo: Diego M. Radzinschi/ALM
Retirement savers can contribute an extra $500 to their 401(k) in 2025. The Internal Revenue Service announced today that the amount employees can contribute to their 401(k) plans in 2025 has increased to $23,500 – as forecast by recent Mercer and Milliman reports.
The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government's Thrift Savings Plan is increased to $23,500, up from $23,000 for 2024.
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Catch-up contributions
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), governmental 457 plans, and the federal government's Thrift Savings Plan remains $7,500 for 2025. Therefore, participants in most retirement plans who are 50 and older generally can contribute up to $31,000 each year, starting in 2025.
Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in these plans. For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500.
More highlights for 2025
IRAs: The limit on annual contributions to an IRA remains $7,000. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 to include an annual cost‑of‑living adjustment but remains $1,000 for 2025.
Saver's Credit: The income limit for the Saver's Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is:
- $79,000 for married couples filing jointly, up from $76,500;
- $59,250 for heads of household, up from $57,375; and
- $39,500 for singles and married individuals filing separately, up from $38,250.
SIMPLE retirement accounts: The amount individuals can contribute to their SIMPLE retirement accounts is increased to $16,500, up from $16,000 in 2024.
Related: 401(k) contribution limit projections for 2025: Mercer, Milliman
The IRS also issued technical guidance regarding all cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2025 in Notice 2024-80 posted today on IRS.gov.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
