The IRS has announced new contribution limits for 401(k) plans in 2025. Employees can now contribute up to $23,500 to their 401(k) plans, an increase of $500 from the 2024 limit. This increase also applies to other retirement savings plans like 403(b) plans, governmental 457 plans, and the federal government’s Thrift Savings Plan.
Workers aged 50 and older can still take advantage of the catch-up contribution, allowing them to contribute an additional $7,500 over the standard limit. This means they can contribute a total of $31,000 to their 401(k) plans in 2025. The SECURE 2.0 Act of 2022 introduces a higher catch-up provision for individuals aged 60 to 63.
According to the IRS, these workers can contribute up to $11,250 in catch-up funds, significantly increasing their annual retirement savings potential. While the 401(k) contribution limit is increasing, the IRS did not raise the annual contribution limit for Individual Retirement Accounts (IRAs), which will remain at $7,000 in 2025. The catch-up contribution for IRAs will also stay the same, allowing people ages 50 and over to contribute an additional $1,000 per year.
New 401(k) contribution limits for 2025
The income phaseout ranges for IRA deductions will increase in 2025 to reflect cost-of-living changes. Single taxpayers covered by a workplace retirement plan can deduct IRA contributions up to an income of $89,000, up from $87,000 in 2024.
For married couples filing jointly, the phaseout range for deducting contributions is between $126,000 and $146,000. Single filers can now contribute to a Roth IRA if their income is under $165,000, while married couples filing jointly face a phaseout range of $236,000 to $246,000. The IRS has also increased the standard deduction.
Single taxpayers and married individuals filing separately can now deduct $15,000 in 2025, up from $14,600 in 2024. Married couples filing jointly will see their standard deduction rise to $30,000, while heads of households receive an increase to $22,500. These annual adjustments are part of the IRS’s efforts to help Americans manage and maintain their retirement savings.
The new limits reflect the rising cost of living and provide workers more flexibility in building their retirement savings while encouraging older workers to save more as they near retirement.
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