At Extreme Investor Network, we are always looking to provide our readers with the latest and most valuable information in the world of personal finance. That’s why we are excited to share the news about the IRS’s announcement of new 401(k) contribution limits for 2025.
In its recent release, the IRS increased the employee deferral limit to $23,500 for 2025, up from $23,000 in 2024. This increase applies to workplace plans such as 401(k)s, 403(b)s, most 457 plans, and the federal Thrift Savings Plan.
Additionally, the IRS also revealed the 2025 catch-up contribution limits for savers aged 50 and older, individual retirement account savings limits, and higher income thresholds for Roth IRA contributions.
Starting in 2025, the 401(k) catch-up contribution limit will remain at $7,500 for savers 50 and older. However, investors aged 60 to 63 can now save an extra $11,250, thanks to changes enacted via Secure 2.0. These amounts are in addition to the $23,500 deferral limit for 2025.
According to Vanguard’s 2024 How America Saves report, in 2023, only 14% of employees deferred the maximum amount into 401(k) plans. The average 401(k) deferral rate across plans was estimated to be 7.4%, with a combined savings rate of 11.7% when including employer contributions.
These new contribution limits and catch-up options provide savers with even more opportunities to grow their retirement savings. At Extreme Investor Network, we believe that staying informed about these changes is crucial for maximizing your financial future. Keep checking back for more updates and tips on how to make the most of your personal finances.