IRS Announces 2025 Retirement Plan Limits

The IRS has released the adjustments for 2025 that affect the amounts employees can contribute to 401(k) plans and individual retirement accounts (IRAs).

Key Changes for 2025

• The employee contribution limit for regular 401(k) plans in 2025 has increased to $23,500, up from $23,000 for 2024.

• The annual limit for Solo 401k contributions is increased to $70,000, up from $69,000.

Other key limits include the following

1.     The employee contribution limit for IRAs remains unchanged at $7,000.

2.     The IRA catch‑up contribution limit for individuals aged 50 and over remains unchanged at $1,000 for 2025.

3.     The employee contribution limit for SIMPLE IRAs is increased to $16,500, up from $16,000.

4.     The limits used to define a “highly compensated employee” and a “key employee” are increased to $160,000 (up from $155,000) and $230,000 (up from $220,000), respectively.

5.     The annual compensation limit (applicable to many retirement plans) is increased to $350,000, up from $345,000.

6.     The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $7,500. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies to participants ages 60-63; these participants can contribute up to $11,250 starting in 2025 (instead of $7,500).

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