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The IRS announced new 401(k) contribution limits for 2025.
In its Friday release, the agency increased the employee deferral limit to $23,500, up from $23,000 in 2024. The change applies to workplace plans, including 401(k) plans. , 403(b) and most 457 plans, as well as the Federal Thrift Program. Savings plan.
The IRS also revealed 2025 catch-up contribution limits for savers aged 50 and over, individual retirement account savings limit and higher income thresholds for Roth IRA contributions.
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Starting in 2025, the 401(k) catch-up contribution limit will remain at $7,500 for savers aged 50 and over. But investors aged 60 to 63 can save an additional $11,250, depending on the changes. promulgated via Secure 2.0. Both amounts are above the $23,500 carryover limit for 2025.
In 2023, only 14% of employees postponed the maximum amount in 401(k) plans, according to Vanguard’s 2024 How America Saves report, which included data from 1,500 qualified plans and nearly 5 million participants.
Across plans, the average 401(k) deferral rate was estimated at 7.4% in 2023, according to the same report. THE combined savings rateincluding employer contributions, was 11.7%, Vanguard found.
