IRS 2025 401(k) Contribution Limits for Taxpayers Aged 50 and Older

The IRS has announced key updates to retirement contribution limits for 2025, offering opportunities for Americans to boost their retirement savings. While the increase in the 401(k) contribution limit is modest, there are notable adjustments to other savings plans and catch-up contributions. Here’s a breakdown of what’s changing and how it affects your financial future.

401(k) and Similar Retirement Plans

For 2025, the contribution limit for 401(k) plans will increase slightly from $23,000 in 2024 to $23,500. While this $500 increase may not seem significant, it still provides an opportunity for employees to save more for retirement.

This contribution increase applies to several similar retirement plans, including:

• 403(b) plans
• Governmental 457 plans
• Federal Thrift Savings Plans (TSP)

These uniform limits ensure that employees across different sectors have the same maximum contribution opportunities for tax-advantaged accounts.

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Catch-Up Contributions

If you’re 50 or older, you’re likely familiar with catch-up contributions, which allow older workers to save more for retirement. In 2025, the catch-up contribution limit for most retirement plans, including 401(k), 403(b), 457 plans, and TSP, remains at $7,500.

This means that eligible individuals 50 and older can contribute up to $31,000 annually by combining both the standard contribution and catch-up limits.

Special Catch-Up for Ages 60–63

A major update for 2025 is the introduction of a higher catch-up contribution limit for employees aged 60 to 63. These individuals can contribute an additional $3,750, bringing the total catch-up limit to $11,250 for this age group. This increase is designed to help individuals nearing retirement accelerate their savings.

For example, a 60-year-old can contribute up to $34,750 in 2025 by combining both the standard and catch-up contributions.

IRA Contributions and Updates

The contribution limit for Individual Retirement Accounts (IRAs) remains at $7,000 in 2025. However, there are several updates to note:

• Catch-up contributions for individuals aged 50 and older remain at $1,000.
• Income ranges for determining eligibility for deductible contributions to traditional IRAs or contributions to Roth IRAs have increased. This change allows more people to take advantage of tax-advantaged retirement savings, even though the contribution limits for IRAs themselves remain unchanged.

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Why These Changes Matter

Even small increases in retirement contribution limits can make a significant impact over time, especially with the power of compounding interest. The higher limits for employees aged 60–63 provide an opportunity to accelerate savings as retirement approaches, helping to make up for lost time.

FAQs

• What is the 401(k) contribution limit for 2025?
  The 401(k) limit for 2025 is $23,500.
• Has the IRA contribution limit changed?
  No, the IRA contribution limit remains at $7,000 for 2025.
• What is the catch-up limit for individuals 50+?
  The catch-up limit for most plans is $7,500 in 2025.
• Who is eligible for the $11,250 catch-up limit?
  Employees aged 60–63 with eligible plans can contribute up to $11,250.
• Are there changes to income limits for IRA contributions?
  Yes, the income ranges for IRA eligibility have been adjusted, making it easier for more people to contribute to IRAs.

These updates from the IRS provide an opportunity for many Americans to boost their retirement savings in 2025. Whether you’re contributing to a 401(k), considering an IRA, or taking advantage of catch-up contributions, these changes are worth factoring into your retirement strategy.