401(k) Contribution Limits for 2025

The IRS has announced new 401(k) contribution limits for 2025.

In its news release Friday, 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)s, 403(b)s and most 457s. Plans, along with the Federal Thrift Savings Plan.

The IRS also introduced catch-up contribution limits for savers age 50 and older for 2025, individual savings limits for retirement accounts, and higher income limits for Roth IRA contributions.

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Starting in 2025, the 401(k) catch-up contribution limit for savers age 50 and older will remain at $7,500. But investors aged 60 to 63 can instead save an additional $11,250 due to changes made via Secure 2.0. Both amounts are above the deferral limit of $23,500 for 2025.

In 2023, only 14% of employees contributed the maximum amount to 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.

According to the same report, the average 401(k) deferral rate across all plans was an estimated 7.4% in 2023. The combined savings rate, including employer contributions, was 11.7%, Vanguard found.