401k Limits in 2025
Let’s break down the new 401k contribution limits in 2025, explore how they apply to different categories of savers, and answer common questions about the updates.
What Are the New 401k Limits in 2025?
Standard Employee Contribution Limit
The limit for pre-tax and Roth 401k contributions has increased to $23,500, up from $22,500 in 2024.
Catch-Up Contributions for Ages 50 and Older
Individuals aged 50 or older can make an additional $7,500 in catch-up contributions, bringing their total potential contribution to $31,000.
Special Catch-Up Contributions for Ages 60-63
A new provision under SECURE Act 2.0 allows individuals aged 60-63 to contribute up to $10,000 in catch-up contributions. This is 150% of the regular catch-up contribution for those 50 and older.
Employer Contribution Limit
Total contributions (including employer matches and employee deferrals) are capped at $73,500, up from $66,000 in 2024.
Roth 401k Catch-Up Rule
High earners (earning more than $145,000 annually) are now required to make catch-up contributions to a Roth 401k, starting in 2026, but this may still affect planning for 2025.
Why Were 401k Limits Increased for 2025?
Help individuals save more for longer retirements
Encourage greater participation, especially among those nearing retirement age
How Can You Maximize the 401k limits in 2025?
Contribute the Maximum Allowable Amount
Aim to reach the full contribution limit of $23,500 if your budget allows.
Take Advantage of Catch-Up Contributions
If you’re 50 or older, prioritize the additional $7,500 catch-up limit.
If you’re aged 60-63, explore the enhanced $10,000 catch-up provision.
Leverage Employer Matching
Maximize employer matches by contributing at least the minimum required to qualify.
Consider Roth 401k Contributions
Evaluate whether contributing to a Roth 401k aligns with your tax strategy, especially if you’re a high earner.
Adjust Contributions Early
Update your payroll deferral elections early in the year to avoid missing out on higher limits.
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FAQs
The standard 401k contribution limit in 2025 is $23,500, up from $22,500 in 2024.
Individuals aged 60-63 can contribute up to $33,500, which includes the $23,500 standard limit and a special $10,000 catch-up contribution.
Additional Considerations for 2025
Mandatory Auto-Enrollment
Tracking Down Lost 401k Accounts
High-Earner Adjustments for Roth Contributions
How to Stay On Track in 2025
Regularly monitor your contributions to ensure you’re meeting the updated limits
Explore diversified investment options within your 401k to optimize growth
Conclusion
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