The IRS announced changes to retirement plan contribution limits for 2025. These changes aren’t drastic, as expected; however, the modifications have a small impact on cash flow for the year. There are no changes for IRAs and Roth IRAs, which is no surprise, since IRA contribution limits were increased in 2024.
The biggest change to 401(k), 403(b), and 457(b) plans is the IRS added an additional catch-up contribution for individuals ages 60-63. The IRS allows (for both 2024 and 2025) individuals aged 50 and older to contribute $7,500 in addition to the maximum contribution limits for 401(k)s, 403(b)s, and 457(b)s. Beginning in 2025, individuals age 60-63 will be allowed to make catch-up contributions up to $11,250 in addition to the maximum contribution limits for these same plans.
Here are the 2024 retirement plan contribution limits compared to the 2025 limits:
Employer Sponsored Plans: 401(k), 403(b), and 457(b)
2024 Limits: $23,000
2025 Limits: $23,500
Catch-up Provision:
2024 Catch-up: $7,500, ages 50+
2025 Catch-up: $7,500, ages 50+
2025 Mega Catch-up: $11,250, ages 60-63
Individual Retirement Plans: IRAs, Roth IRAs
2024 Limits: $7,000
2025 Limits: $7,000
Catch-up Provision
2024 Catch-up: $1,000, ages 50+
2025 Catch-up: $1,000, ages 50+
SIMPLE IRAs:
2024 Contribution Limit: $16,000
2025 Contribution Limit: $16,500
SEP IRAs:
2024 Contribution Limit: $69,000
2025 Contribution Limit: $70,000
The IRS reviews and modifies retirement plan contributions annually based on inflation, average wage growth, and other factors.
Source: https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000