Navigating the 2025 401(k) Contribution Limits
Published on by Jessica Doremus in Benefit Plan Audits
As we continue to adapt our financial strategy through 2025, it’s essential for both individuals and businesses to understand the updated contribution limits and potential tax changes. For 2025, the Internal Revenue Service (IRS) has made several amendments to the contribution limits, which could influence your financial decisions.
For starters, the annual contribution limit for 401(k) plans has been raised to $23,500, up from $23,000 in 2024. This change provides individuals an opportunity to increase their retirement savings. For those aged 50 and above, the IRS allows for catch-up contributions, which for 2025 has been set at $7,500. This means that participants in this age group can contribute a total of $31,000 to their 401(k) in 2025.
An exciting feature of the SECURE 2.0 Act is the provision for a higher catch-up contribution for participants aged 60 to 63 if your plan allows it. In a bid to enhance retirement savings, these individuals can make catch-up contributions up to $11,250. Read more about the Secure 2.0 changes for 2025 in a previous blog post.
Furthermore, the maximum amount of compensation considered for contributions has been increased to $350,000 in 2025, up from $345,000 in 2024.
Contributions to traditional or Roth IRAs remain unchanged in 2025 at $7,000 a year, or up to 100% of your earned income if it is less than $7,000. Individuals aged 50 or older can make an additional $1,000 catch-up contribution.
Additional resources
You may also be interested in our employee benefit plan audit video series, available on-demand, or the most recent 401(k) plan management survey. We also offer a series of compensation and benefits studies – useful tools for benchmarking your organization against others in our region.
If you have questions or need assistance regarding contribution limits, Barnes Dennig has the answers. For additional information, contact us. As always, we’re here to help.
