With new 401(k) contribution limits for 2025, it’s time to update your retirement plan. Learn just how much you may possibly save next year with retirement planning advisors at EP Wealth.
How Much Can I Contribute to a 401(k) in 2025?
As the year winds down, it’s the perfect time to review upcoming contribution limit changes for 401(k)s in 2025. Contact a financial advisor at EP Wealth to discuss how these updates will impact your retirement planning objectives.
Employee Contribution Limits: What’s New in 2025?
In 2025, the annual contribution limit for 401(k) and 403(b) plans for employees under 50 will increase from $23,000 to $23,500. While this is a modest increase, every additional dollar counts when building your retirement savings. Contributing the maximum amount can potentially help keep you on track for a secure retirement, especially when combined with employer contributions.
Catch-Up Contributions for Those 50 and Older
Catch-up contributions are designed to help employees age 50 and older grow their retirement savings during the critical years before they stop working.
In 2025, the limit for catch-up contributions for those 50 and over will remain at $7,500. This allows employees in this age group to contribute up to a total of $31,000 to their 401(k) plans in 2025. This boost is intended to help older workers make up for any missed contributions earlier in their careers.
Higher Catch-Up Contributions for Employees 60-63
Under the SECURE 2.0 Act, employees aged 60 to 63 can take advantage of even higher catch-up contribution limits to further bolster their retirement savings.
In 2025, employees aged 60 to 63 can contribute an additional $10,000 or 150% of the standard catch-up limit for the prior year—whichever amount is higher. For this age group, the total 401(k) contribution limit for 2025 will be $33,500.
Employer Contributions: How Much Can They Add to Your 401(k)?
For workers under 50, the total for employer and employee contribution limits for 401(k) and 403(b) will increase from $69,000 in 2024 to $70,000 in 2025. For employees 50+, the total combined contribution is $77,500. With the increased catch-up limits, workers ages 60-63 and their employers can contribute a total of $81,250 in 2025.
In addition to your personal contributions, many employers offer matching contributions as part of their benefits package. For employees under 50, the total combined limit for employer and employee contributions to a 401(k) or 403(b) will increase to $70,000 in 2025, up from $69,000 in 2024. Employees aged 50 and older can contribute up to $77,500, including catch-up contributions.
For employees aged 60 to 63, who are eligible for the higher catch-up limits, the total allowable contribution rises to $81,250 in 2025.
Total Maximum Contribution Limits for 2025
To give you a clear snapshot, here are the contribution limits for 2025:
- Employees under 50: $23,500 personal limit; $70,000 combined employee and employer limit
- Employees 50 and older: $31,000 total with catch-up; $77,500 combined employee and employer limit
- Employees aged 60-63: $33,500 total with enhanced catch-up; $81,250 combined employee and employer limit
Potential Tax Benefits of Maximizing Your 401(k) Contributions
Contributing to a 401(k) doesn’t just help build your retirement nest egg; it also offers potential tax advantages that may possibly be beneficial both now and in the future. By making contributions with pre-tax dollars, you can reduce your taxable income for the year, potentially lowering your tax bracket. This tax-deferral benefit means you’ll only pay taxes on your withdrawals in retirement, when you’re likely to be in a lower tax bracket.
Maximizing your 401(k) contributions each year may potentially result in tax savings over time. Additionally, the investment gains on your 401(k) contributions grow tax-free until you start making withdrawals. Taking full advantage of these tax benefits is a powerful way to manage your retirement strategy and perhaps preserve more of your wealth.
Contact an EP Wealth retirement planning professional near you for personalized guidance and solutions to help you reach your future financial goals.
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