Planning for retirement involves strategic financial decisions, which is why it’s important to understand the latest retirement savings plan contribution limits and what they mean for you and your ability to maximize your savings. Every year, the IRS sets new limits on how much you can contribute to different types of retirement plans. These limits dictate how much you and your employer can contribute to various retirement accounts.
2025 retirement savings plan contribution limits at a glance
- 401(k) employee contribution: $23,500, with $7,500 catch-up
- Total combined contribution limit (employer and employee contributions to 401(k)): $70,000
- IRA: $7,000, with $1,000 catch-up
- SIMPLE: $16,600, with $3,500 catch-up
- Employees aged 60, 61, 62 and 63 have an increased catch-up amount of $11,250
Contribution limits for employer-sponsored plans
401(k), 457, and 403(b) plans
The IRS has increased the maximum employee contribution limit from $23,000 to $23,500 for 401(k), 457, and 403(b) plans. Employees aged 50 and above can still contribute an additional catch-up amount of $7,500 (unchanged since 2023), allowing for a total of $31,000 in annual contributions. In 2025, employees aged 60, 61, 62 and 63 have an increased catch-up amount of $11,250.
Additionally, the maximum annual compensation considered for contributions has been raised to $350,000.
Income thresholds
- The income threshold for the determination of a key employee for nondiscrimination testing increases from $220,000 to $230,000
- The income threshold for the determination of a highly compensated employee for nondiscrimination testing increases from $155,000 to $160,000
Defined Benefit (DB) pension plans
For DB pension plans, the maximum annual benefit an employee can receive has been increased to $280,000.
SIMPLE retirement accounts
For Savings Incentive Match Plan for Employees (SIMPLE) retirement accounts, the maximum elective pretax contributions have been raised from $16,000 to $16,500, while the catch-up limit for those aged 50 and above remains at $3,500.
Due to changes in SECURE 2.0, individuals can contribute more to certain SIMPLE retirement accounts. In 2025, the contribution limit is $17,600.
For employees aged 50 and older, a special catch-up limit applies, set at $3,850 for 2025. Additionally, employees aged 60 to 63 have a higher catch-up contribution limit of $5,250 for 2025.
Contribution limits for traditional and Roth IRAs
The maximum amount an individual can contribute to an IRA—be it traditional, Roth, or a combination of both—remains at $7,000 for 2025, with an additional catch-up contribution of $1,000 allowed for individuals aged 50 and above. The IRS has also adjusted phase-out ranges based on income and tax filing status, impacting the deductibility of contributions to traditional and Roth IRAs.
The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2025.
Income limit for the Saver’s Credit for low- and moderate-income workers
- $79,000 for married couples filing jointly
- $59,250 for heads of household
- $39,500 for singles and married individuals filing separately
IRA phase-out ranges for 2025
Taxpayer Filing Status | IRA Phase Out Range |
Single taxpayers covered by a workplace retirement plan | $79,000 – $89,000 |
Married couples filing jointly (with contributing spouse covered by a workplace retirement plan) | $126,000 – $146,000 |
IRA contributor not covered by a workplace retirement plan, married to a covered spouse | $236,000 – $246,000 |
Married individual filing a separate return, covered by a workplace retirement plan | $0 – $10,000 |
Roth IRA phase-out for singles and heads of household | $150,000 – $165,000 |
Roth IRA phase-out for married couples filing jointly | $236,000 – $246,000 |
Roth IRA phase-out for married individuals filing separately | $0 – $10,000 |
Strategizing for the new retirement savings plan contribution limits
- Given the increased limit, consider maximizing contributions to 401(k) and similar plans to bolster retirement savings (employers offering matches can help amplify these savings)
- With higher phase-out ranges, assess eligibility for deductible traditional IRA contributions and explore potential increases in Roth IRA contributions
- For precise calculations and eligibility criteria based on your financial situation, make use of IRS resources or consult a financial advisor well-versed in retirement planning
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Retirement saving FAQ
What happens if I exceed contribution limits?
Contributing beyond the set retirement savings contribution limits can lead to tax penalties. It’s crucial to monitor contributions closely and rectify any accidental over-contributions before tax deadlines.
Does my employer match count toward 401(k) limits?
Employer matches for 401(k) contributions don’t count toward your individual limit. However, the combined total of your contributions and your employer’s cannot surpass the limit set by the IRS.
Can I have a 401(k) and an IRA?
Yes, you’re allowed to have both a 401(k) and an IRA. IRAs serve as an excellent supplement to retirement savings, particularly if you’re aiming to maximize your 401(k) contributions or receive a full match from your employer.
Self-employed? Learn more about your retirement savings options.
Can I max out both my 401(k) and Roth 401(k)?
Absolutely. If you have both types of plans, you can contribute to each within a year. However, the total contributions across both plans must not exceed the IRS’ yearly limit. When choosing the right plan for you, understanding the differences between a Roth IRA, a traditional IRA, and a 401(k) can aid your decision-making process.
Learn about traditional-to-Roth IRA conversion.
Are there income limits for 401(k)s?
There isn’t a universal income limit for 401(k) contributions. However, the IRS implements contribution limits for “highly compensated employees” in cases where there’s a discrepancy in contribution levels among employees.
The IRS has a test to evaluate if employees across various compensation levels participate proportionately. If discrepancies are found, highly compensated employees might face lowered contribution levels, leading to potential returns of excess contributions by employers.
Definition of a highly compensated employee:
- Individuals owning more than 5% interest in a business at any time during the year
- Individuals receiving over $160,000 in 2025 from the business, ranking in the top 20% by compensation if the employer ranks employees
Remember: Unlike a traditional 401(k) plan, a safe harbor 401(k) plan is not subject to complex annual nondiscrimination tests.
Where can I find more information?
Visit the IRS’ website for more details on retirement savings contributions.
Do I have old retirement funds from a previous employer?
Please visit the link to search the National Registry of Unclaimed Retirement Benefits. If you find funds under your name, speak to your advisor about claiming them and rolling them into your actively managed retirement account.
Stay informed to maximize your retirement benefits
Retirement planning demands a proactive approach. Regularly reassessing contributions and staying informed about IRS updates will help you navigate the evolving landscape of retirement savings effectively. It’s advisable to understand the annual IRS updates or consult a financial advisor to ensure your retirement strategy aligns with the current contribution limits and maximizes your savings potential and nest egg.
If you need help making informed decisions and securing your financial future, don’t hesitate to get in touch with one of our trusted advisors.
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