New Year, Bigger Savings

The contribution limit for employees participating in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan has increased from $23,000 to $23,500 for 2025. For individuals participating in a SIMPLE IRA, the contribution limit has increased to $16,500, up from $16,000 in 2024. 

The catch-up contribution limits for individuals aged 50 and older will remain at $7,500 for 401(k), 403(b), most 457 plans, and the Thrift Savings Plan. This means that in 2025, individuals 50 and older can contribute up to $31,000 towards these retirement plans. The catch-up contribution for employees aged 50 and older in SIMPLE plans remains at $3,500. 

Thanks to SECURE 2.0, for the first time, participants aged 60-63 will be able to make larger catch-up contributions. These individuals can contribute an additional $11,250 instead of $7,500 to their 401(k), 403(b) or 457, or an additional $5,250 instead of $3,500 to their SIMPLE IRA. 

Additionally, the Roth catch-up wage threshold, which determines whether an individual’s catch-up contributions to certain employer plans must be designated as Roth contributions, remains at $145,000 for 2025.

The limitation that defines a Highly Compensated Employee (HCE) in 2025 is $160,000, up from $155,000 in 2024.

A few more key changes for 2025 include:

• The annual compensation limit has increased to $350,000
• The annual defined contribution (DC) limit has increased to $70,000
• The annual defined benefit (DB) contribution limit has increased to $280,000

For a visual outline of the 2025 contribution limits, click here.