Wondering how much you and your team can stash away in your 401(k) or other retirement plans next year? The IRS recently dropped Notice 2024-80, revealing the new contribution limits for 2025. With inflation slowing down, the increases aren’t as big as in the past few years, but there are still some notable changes to know about.
401(k) Plans
Good news: If you’re saving in a 401(k), the contribution limit is bumping up to $23,500 for 2025 (that’s $500 more than 2024). This applies to 403(b) plans, most 457 plans, and even the federal government’s Thrift Savings Plan.
If you’re 50 or older, your catch-up contribution limit stays at $7,500. But here’s the exciting part: under the SECURE 2.0 law, if you’re between 60 and 63, you’ll be able to save even more. Your catch-up limit will jump to $11,250 in 2025! That means:
If you’re 50 or older, your total contribution limit is $31,000
If you’re 60–63, you can stock away up to $34,750
SEP and Defined Contribution Plans
For SEP plans and other defined contribution plans, the annual contribution limit will rise slightly from $69,000 to $70,000. The minimum compensation required to participate in a SEP will stay at $750.
SIMPLE Plans
If you’re saving in a SIMPLE plan, your deferral limit will increase to $16,500 in 2025 (up from $16,000). For those 50 or older, your catch-up limit will remain at $3,500. But if you’re in the special 60–63 age range, your catch-up limit increases to $5,250. Meaning:
If you’re 50 or older, your total limit is $20,000
If you’re 60–63, you can contribute up to $21,750
Other Updates to Keep in Mind
Here are a few more adjustments for 2025:
Defined benefit plan annual limits will increase to $280,000 (up from $275,000)
“Key employee” limits for top-heavy plans rise to $230,000
“Highly compensated employee” limits will jump to $160,000
IRA Contributions
IRA contribution limits remain the same at $7,000 for 2025. And if you’re 50 or older, your catch-up limit also remains $1,000 since it doesn’t adjust for inflation.
Start Planning for 2025
These updated limits give you and your team more room to grow your retirement savings. Have questions about your plan or want to explore new options? Talk with one of our VAAS Consultants.