401(k) Contribution Limits For 2025

In This Article...

Introduction

When it comes to planning for retirement, a 401k plan is one of the most popular and effective tools available. It allows individuals to save for retirement while enjoying certain tax benefits. However, it’s crucial to understand the contribution limits that govern these plans. In this guide, we will explore the 401k contribution limits for 2025, including important updates, catch-up contributions, employer contributions, and compensation limits.

The 2025 401k Contribution Max

One factor to consider when contributing to a 401k savings plan is the contribution limit (the maximum amount of money you can put in your 401k for a given year) set by the IRS.

In 2025, the contribution limit for 401k plans, including 403(b) plans, and most 457 plans, will increase to $23,500. This is an increase from the 2024 limit of $23,000.

To take full advantage of this higher limit, individuals can adjust their contribution percentages or dollar-based employee deferrals to ensure they reach the maximum contribution. By contributing the additional money per month, individuals can make the most of their 401k plans and secure a more financially stable retirement.

The 2025 401k Catch-Up Contribution Max

For individuals aged 50 years or older, catch-up contributions are available to boost savings ahead of retirement. Catch-up contributions allow these individuals to contribute extra money in their 401k plans to accelerate their savings ahead of retirement especially if they couldn’t maximize contributions earlier in life.

In 2025, the catch-up contribution limit remains the same as 2024 at $7,500.

This means that individuals in this age range can contribute $31,000 to their 401k plans in 2025.

Conclusion

Understanding the 401k contribution limits for 2025 is crucial for effective retirement planning. By staying informed about the latest updates, catch-up contributions, employer contributions, and compensation limits, individuals can make well-informed decisions to maximize their retirement savings. Remember to consult with a financial advisor or tax professional to ensure compliance with IRS regulations and develop a personalized retirement strategy that aligns with your financial goals.

For those of you that also have IRAs, make sure to check out what the 2025 IRA contribution limits are!

Start planning for your future today and take full advantage of the opportunities offered by your 401k plan. With careful consideration and strategic contributions, you can build a solid foundation for a financially secure retirement.

Disclaimer: This article is for informational purposes only and should not be considered financial or tax advice. Please consult with a qualified professional before making any financial decisions.

The commentary on this article reflects the personal opinions, viewpoints and analyses of the author, Ben Fuchs, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security, or any security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Foundations deems reliable any statistical data or information obtained from or prepared by third party sources that is included in any commentary, but in no way guarantees its accuracy or completeness.

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