On November. 1, 2024 ,the Internal Revenue Service issues a news release IR-2024-285, which announced 401(k) limit increases to $23,500 for 2025, (raised up from $23,000 for 2024.) IRA limit remains $7,000.

This news comes as a relief for many American workers who are looking to save more for retirement. The 401(k) limit is the maximum amount that an individual can contribute to their employer-sponsored retirement account in a given year, while the IRA (individual retirement account) limit is the maximum amount that an individual can contribute to their personal retirement account.

For 2025, the catch-up contribution limit for employees aged 50 and older participating in most 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan remains set at $7,500. Consequently, these participants can contribute up to $31,000 annually starting in 2025. Additionally, under the recent changes introduced by SECURE 2.0, employees aged 60, 61, 62, and 63 in these plans can benefit from a higher catch-up contribution limit of $11,250, up from the standard $7,500.

The increase in 401(k) contribution limits is important because it allows individuals to save more money towards their future. With the cost of living on the rise and uncertainty surrounding Social Security benefits, having a healthy nest egg for retirement has become crucial. By increasing the limit by $500 from the previous year, the IRS is giving Americans an opportunity to boost their savings even further.

You can read the complete news release issues by the Internal Revenue Service (IRS) by clicking here: 401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000