IRS Increases 401(k) Contribution Limits to $23,500 for 2025 Retirement Savings
The Internal Revenue Service (IRS) recently announced that, for the year 2025, Americans will be able to contribute up to $23,500 to their 401(k) plans. This marks a $500 increase from the current limit of $23,000. The adjustment, which reflects cost-of-living increases, is set to benefit millions of retirement savers across the country.
The new limits apply to several types of retirement plans, including:
- 401(k) plans
- 403(b) plans
- Most 457 plans
- The federal government’s Thrift Savings Plan
Workers aged 50 and older can make additional catch-up contributions of $7,500, allowing them to save up to $31,000 annually. A significant new provision under the SECURE 2.0 Act will permit workers aged 60-63 to contribute even more, with catch-up limits of $11,250.
While 401(k) limits have increased, IRA contribution limits remain unchanged at $7,000 for 2025. However, the IRS has raised income thresholds for Roth IRA eligibility. Singles can now contribute up to $165,000 in modified adjusted gross income, up from $161,000.
Source: IRS Newsroom