401(k) Contribution Limits for 2025

The Internal Revenue Service (IRS) increases the contribution limits for 401(k) retirement plans each year. In 2025, the IRS bumped up the maximum annual contribution limit by $500, allowing employees to defer up to $23,500 into workplace contribution plans, up from $23,000 in 2024.

Knowing the maximum amount you can contribute for the tax year 2025 can save you from paying taxes twice. If you go beyond limits set by the IRS, you’ll pay income tax on the excess contributions now and again when you make withdrawals from your retirement account in the future.

Learn how the contribution limits work and how much you can sock away in a 401(k) plan in 2025.

Key Takeaways

• The 2025 401(k) annual contribution limit is $23,500, with a total contribution limit (including employer contributions) of $70,000.
• Catch-up contributions remain $7,500 for those 50 and older, but individuals 60-63 can contribute an additional $11,250.
• Employer match contributions are limited based on the income limit of $350,000.
• Excess contributions must be withdrawn by April 15 of the following year to avoid double taxation.
• The IRA limit remains at $7,000, with an additional $1,000 catch-up contribution for older savers.
• A Roth 401(k) offers tax-free withdrawals, while a Traditional 401(k) provides a tax-deferred benefit.

401(k) Contribution Limits

For the 2025 tax year, the annual contribution limit for employee contributions to a 401(k) savings plan has increased. Savers who want to max out their retirement savings can add another $500 to their plans, according to the Internal Revenue Service’s latest adjustment.

Here are the latest contribution plan maximums for your 401(k) retirement plans.

• Employee maximum contribution limit: $23,500 (up from $23,000 in 2024)
• Total contribution limit (includes employer contributions): $70,000 (up from $69,000 in 2024)
• Catch-up contribution limit (for those 50 and older): Remains at $7,500
• Total contribution for savers 50+: $77,500
• Higher catch-up contribution for ages 60-63: $11,250, making the total contribution limit $81,250

These contribution limits apply to 401(k), 403(b) plans, most 457 plans, and the federal government’s Thrift Savings Plans.

Understanding Catch-Up Contributions

If you are 50 or older, you qualify for catch-up contributions, which allow you to contribute an additional $7,500 beyond the standard employee contribution limit.

However, for employees aged 60-63, the catch-up contribution limit is even higher at $11,250, increasing the total contribution you can make in 2025.

Additionally, starting in 2026, high earners (those making over $145,000 in the previous year) will need to make catch-up contributions as Roth contributions instead of pre-tax elective deferrals.

401(k) Income Limits and Employer Matching

The income limit for calculating matching contributions has increased to $350,000 in 2025 (up from $345,000 in 2024).

While you can still contribute the full employee contribution limit regardless of income, your employer match will be capped based on earnings up to $350,000.

For example, suppose your employer offers a 5% employer match, and you earn $400,000. In that case, your employer will only match 5% of $350,000 ($17,500), not 5% of your entire salary.

401(k) Plan Limit	Description	2025	2024
Employee Contribution	Maximum total annual contributions	$23,500	$23,000
Total Contribution	Employee and employer contributions combined	$70,000	$69,000
Catch-up Deferrals	Additional contribution amount for those over age 50	$7,500	$7,500
Total Contribution for 50+	Total contribution limit, plus catch-up contribution	$77,500	$76,500
Income Limit	Rules depend on the 401(k) plan	$350,000	$345,000

401(k) Retirement Savings for Older Investors

If you’re at least 50 years old, you can make “catch-up” contributions by adding an extra $7,500 into your account, for a total contribution of $31,000 in 2025. The total maximum you can put away in your 401(k) plan in 2025, including employer contributions, is $77,500—$7,500 more than the $70,000 maximum allowed for everyone else. 

Employers often provide a matching contribution, which is essentially free money. However, most companies will only contribute to your plan if you commit to also saving the minimum amount to get the match.

Traditional 401(k) vs Roth 401(k)

When contributing to a 401(k), you can choose between a Traditional 401(k) and a Roth 401(k):

• Traditional 401(k): Contributions are pre-tax, reducing taxable income in the year of contribution. Taxes are owed on withdrawals in retirement.
• Roth 401(k): Contributions are after-tax contributions, meaning you won’t get an upfront tax break, but all withdrawals in retirement are tax-free.

Some investors diversify by splitting contributions between both types. Just ensure that your elective deferrals to both accounts do not exceed the maximum contribution limit of $23,500.

What Happens If You Exceed the 401(k) Contribution Limit?

A change in income or contributing to multiple plans can create an excess deferral. If you exceed the deferral limit, you may owe income tax on the excess contributions for the year you contributed and again when withdrawn in retirement.

• If you exceed the maximum amount, notify your plan administrator before April 15 of the following year to remove the excess and avoid double taxation. Ask for a distribution from the plan of the excess deferral limit adjusted for earnings.
• The distribution is included in your 2025 gross income for tax purposes. File an amended tax return if you file your taxes before requesting the distribution.
• While the earnings are taxed, you won’t owe the additional 10% tax on early distributions. You will receive Form 1099-R from the plan for tax reporting.

If you leave the excess funds in the plan, the amount is excluded from your cost basis when you take 401(k) distributions after retirement. You get taxed on the excess deferral left in the 401(k) when you contribute and again when you take a distribution. Speak to a financial advisor if you don’t fully understand how to avoid creating an excess deferral.

Pro tip: If your company offers auto-enrollment, make sure you understand how its existing parameters will affect your ability to save for retirement.

“The average default contribution rate was 4.1% in Q2 2023, and that’s not a lot,” Hensley advises. “It’s like setting the cruise control, but at a speed that won’t get you to your destination on time. Your contributions may go up each year, but not at the rate you were expecting.”

IRA Contribution Limits 2025

An Individual Retirement Account (IRA) is another way to save for retirement. The IRS maintained the contribution limits for IRAs, allowing investors to save $7,000 in 2024 and 2025. Catch-up contributions for those 50 and older will remain unchanged at $1,000.

More Americans may also qualify for Roth IRA contributions in 2025, as the adjusted gross income phaseout range rises pretty significantly to between $150,000 and $165,000 for single individuals and heads of households.

Bottom Line

It’s tough to live comfortably on Social Security benefits alone. If your employer offers a 401(k) plan, take advantage of the tax benefits and future retirement income. Start with a small contribution if you’re on a tight budget. Know the annual IRA limits and maximum contributions on elected deferrals, and plan early to maximize your 401(k) savings in 2025.

You can make the most of your retirement accounts by understanding the IRS contribution limits, employer match policies, and different tax advantages of pre-tax vs. Roth contributions.

Whether maximizing elective deferrals in a 401(k) or contributing to an IRA savings account, careful planning will help ensure a secure financial future.