IRS Announces New 401(k) Contribution Limits for 2025 – Technologist

The IRS announced 401(k) contribution limit increases for 2025. IRA contribution limits will remain the same.

New 401(k) Contribution Limits for 2025

Good news for 401(k) account owners: You’ll be able to contribute an additional $500 in 2025.

The IRS raised the standard 401(k) contribution limit from $23,000 to $23,500 (+2.2%). It did not raise the IRA contribution limit, which remains $7,000.

The $500 that the IRS added to 401(k) contributions in 2025 is the same bump we got last year. Contribution limit increases have slowed to a crawl since inflation has cooled significantly in the last two years.

If you’re at least 50 years old, you can make an additional $7,500 in 401(k) catch-up contributions. That amount didn’t go up this year. So if you’re at least 50 years old in 2025, you can contribute up to $31,000 to a 401(k).

In addition to 401(k) plans, catch-up contribution rules apply to Thrift Savings Plan, 403(b) and most 457 plan participants.

Keep in mind that the $23,500 ($31,000 for those 50 and older) is the total amount you can contribute to 401(k) plans even if you work for multiple companies.

Use our 401(k) calculator to discover how the new contribution limits could impact your retirement projections.

New, Special Supersized Catch-Up Contributions For Ages 60-63

If you nerd out about retirement rules, taxes, contribution limits, Required Minimum Distributions (RMDs) and more, you’re probably familiar with SECURE 2.0.

The law, initiated by the COVID-19 pandemic, brought sweeping changes to tax-advantaged retirement accounts. One of those changes kicks in on Jan. 1, 2025.

If you’re 60, 61, 62 or 63 years old, you can now contribute $10,000 or 150% of the standard catch-up contributions, whichever is greater. So for this year, that’s $11,250.

Add that to the standard contribution limit ($23,500) and those aged 60-63 can put in $34,750(!) in 2025.

Roth IRA Eligibility Income Limits for 2025

Clark labels himself “the man from Roth” and preaches his love for Roth IRAs every few months. However, if you earn more than a certain amount in taxable income, you’re not allowed to contribute to a Roth IRA.

The IRS increased IRA income limits yet again for 2025. If you fall within the “phase-out” range, you can still make Roth IRA contributions. But an equation will tell you exactly how much you can contribute (it’ll be less than the full $7,000).

Here are the new income limits:

• Single taxpayers: Phase-out range now $79,000 to $89,000
• Married filing jointly: Phase-out range now $126,000 to $146,000
• Married filing separately: Phase-out range still $0 to $10,000

Use our Roth IRA growth calculator to determine what your balance could be in retirement.

Clark Howard’s Advice for Retirement Investing via 401(k) Plans

If you want to invest for retirement, stop, do not pass “Go” and do not collect $200, Clark says.

First, pay off all high-interest credit card debt. That’s more of a problem for Americans with each passing year of late. And interest rates often are 20%+.

Then at least start an emergency fund, or a “rainy day fund.” If you don’t have one already, pick out one of the best high-yield online savings accounts and start making a contribution, even if it’s small, the next time you get paid.

Make sure you have at least $1,000 in an account there before you consider investing. Then slowly increase the amount you’re saving over time until you’ve put away about six months’ worth of expenses.

Once you start investing, your first, most immediate goal is to contribute enough to your workplace 401(k) to secure the full company match. Even if you aren’t a max saver who is contributing up to the 2025 401(k) limit, you should contribute enough to secure this additional money.

“The beauty of an employer match is that it’s the equivalent of an automatic pay raise,” Clark says.

For most people (as long as your 401(k) plan isn’t extraordinarily expensive in fees), increasing your 401(k) contributions up to the maximum limit is your next step to investing for retirement.

If you’re already reaching the max 401(k) contribution limit in 2024, you’ll be able to save an extra, tax-advantaged $500 next year.

You can make 2024 401(k) and IRA contributions through April 15, 2025. But remember, if you hit your maximum limit prior to the end of 2023, you could lose out on any company match for the rest of this year.

The post IRS Announces New 401(k) Contribution Limits for 2025 appeared first on Clark Howard.