It’s official! IRS announces 401(k) contribution limits for 2025

The annual contribution limit for employees participating in government 401(k), 403(b), 457 plans and the federal government’s Thrift Savings Plan will increase from $23,000 for 2024 to $23,500.

Catch-up contributions

The catch-up contribution limit for workers age 50 and older who participate in government 401(k), 403(b), 457 plans, and the federal government’s Thrift Savings Plan will remain $7,500 through 2025. Therefore, participants in most retirement plans that Those 50 and older can generally contribute up to $31,000 per year starting in 2025.

Due to a change in SECURE 2.0, a higher catch-up contribution limit applies to employees aged 60, 61, 62 and 63 who participate in these schemes. For 2025, this higher catch-up contribution limit will be $11,250 instead of $7,500.

Even more highlights for 2025

IRAs: The limit for annual contributions to an IRA remains $7,000. The IRA catch-up contribution limit for individuals age 50 and older was changed under SECURE 2.0 to include an annual cost-of-living adjustment, but remains $1,000 through 2025.

The savings balance: The income limit for the savings credit (also known as the pension savings contribution credit) for employees with a low and average income 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 account will increase from $16,000 in 2024 to $16,500.