What is the Roth limit for 2025?

The contribution limit for Roth 401(k) accounts for 2025 is $23,500 for employee contributions and $70,000 for combined employer and employee Roth contributions. The catch-up contribution limit is $7,500. The Roth IRA contribution limit is $7,000 for the 2025 tax year, and the catch-up contribution limit is $1,000 for those 50 years and older.

What is the simple IRA limit for 2025?

The annual limit for SIMPLE IRAs in 2025 is $16,500. Those who are 50 or older can make an additional contribution of $3,500.

What is a highly compensated employee 401(k) 2025?

A highly compensated employee in 2025 will be someone who earns over $160,000. This income limit also includes bonuses, commissions, and overtime. If you’re a small business owner or an employee who falls into this category, we recommend speaking to a personal finance professional.

How does maximizing your 401(k) contribution help you save money in taxes?

The money you contribute to your 401(k) reduces your taxable income. The more money you contribute, the lesser your taxable income, which can help you save money in taxes and enjoy tax-deferred gains.

New 401(k) Contribution Limits for 2025

7 MIN READ

Published April 05, 2024 | Updated February 28, 2025

Expert Verified

Written by Priyanka Trivedi

Edited by Wes Silver

Reviewed by Teresa Dodson

Turbo Takeaways

With the start of the year, you have a new opportunity to save money for retirement. The IRS has announced new 401(k) contribution limits for 2025, and knowing these limits will allow you to plan your retirement savings better.

The IRS sets annual contribution limits for retirement plans, which can change to adjust for inflation. While the IRA limit remains the same for 2025, the 401(k) limit has increased, which means you can put aside more money for a comfortable retirement this year.

Keep reading to learn more about the new 401(k) contribution limits for 2025 and how they can help you maximize your retirement savings. Make the most of this opportunity to grow your nest egg this year.

What are 401(k) Contribution Limits?

The IRS sets an annual contribution limit for retirement savings plans. These limits determine how much you and your employer can contribute to the retirement plan in any given year. These limits are annually evaluated to adjust for factors like cost of living and inflation.

The IRS also has compensation limits to ensure fairness, so those earning a higher income don’t benefit more than those with a modest salary.

401(k) Contribution Limits for 2025

The 401(k) contribution limits for 2025 are:

Employee contributions: $23,500
Combined employee and employer contributions: $70,000

Depending on the plan, you may also be able to make extra post-tax contributions. However, your total contributions cannot be more than your annual salary at the company where you have your 401(k) plan.

Roth 401(k) Contribution Limits for 2025

The contribution limit for Roth 401(k) accounts is the same as a traditional 401(k) account: $23,500 for employee contributions and $70,000 for combined employer and employee contributions.

The same contribution limits also apply to the federal government’s Thrift Savings Plan, which has most 457 plans and 403(b) plans. If you have multiple accounts, your total contributions to Roth and traditional accounts cannot exceed the $23,500 basic contribution limit.

Changes to 401(k) Contribution Limits in 2025

The 401(k) contribution limits in 2025 have slightly increased. In 2024, the contribution limit for employee contributions was $23,000 and $69,000 for combined employer and employee contributions.

The catch-up contribution limit for those who are 50 or older remains the same at $7,500.

401(k) and Roth Contribution Limits	Employee Contributions	Employer and Employee Contributions	Catch-Up Contributions
2024	$23,000	$69,000	$7,500
2025	$23,500	$70,000	$7,500

Catch-up Contributions for Individuals Over 50

Catch-up contribution allows those who are aged 50 or older to make extra contributions to their 401(k) and individual retirement accounts (IRA). This means that apart from the annual contribution limit set by the IRS, you can contribute an additional amount to your retirement plan.

Catch-up contributions can be a helpful strategy for financial stability during retirement. If you’ve not been able to max out your 401(k) during your working life, you can take advantage of catch-up contributions to save more and benefit from tax advantages.

401(k) Contribution Limits for Individuals Over 50 in 2025

If you’re over the age of 50 in 2025, you can contribute an additional $7,500 to your 401(k) as a catch-up contribution. This means that you can contribute a total of $31,000 in 2025.

Roth 401(k) Contribution Limits for Individuals Over 50 in 2025

The catch-up contribution limit for Roth 401(k) accounts is the same at $7,500 in 2025. If you have a traditional 401(k) and a Roth 401(k), you can contribute up to the annual contribution and catch-up limits across both.

401(k) Contribution Limits 2025 for Multiple Plans at Different Employers

If you have multiple 401(k) plans with different employers, your total employee contributions across all plans cannot exceed the 2025 limit of $23,500.

However, employer contributions are counted separately and may allow for a higher total retirement savings amount.

After-Tax 401(k) Contribution Limits for 2025

If you’ve already contributed up to the maximum limit to your 401(k) as an employee, you may be able to save more through after-tax contributions. While this allows you to increase your retirement savings, keep in mind that you may owe taxes again when you withdraw the funds, depending on how they are rolled over.

Not all plans allow after-tax contributions, so check with your employer. If your plan offers this option, the total combined limit for employee deferrals, employer contributions, and after-tax contributions is $70,000 in 2025.

401(k) Contribution Limits for Highly Paid Employees

Those who earn high salaries are categorized as Highly Compensated Employees (HCE) and are subject to stricter contribution limits.

The IRS uses the Actual Deferral Percentage (ADP) test for eligibility to prevent highly paid employees from getting unfair tax advantages from 401(k) plans. In 2025, a highly compensated employee will be someone who earns more than $160,000.

Highly compensated employees may face restrictions on how much they can contribute to their 401(k)s. For example, the IRS limits the income on which an employer can offer a contribution match to such employees, which is $345,000 in 2024.

Regardless of your income, the maximum 401(k) contribution limits for 2025 will also apply. This means that the maximum amount you contribute to your 401(k) plan from all sources cannot exceed $70,000 in 2025. We recommend speaking to a tax or financial consultant if you’re a highly compensated employee.

What Happens When You Make Excess Contributions?

You may have to pay a 10% fine and income taxes on any excess contributions you make to your 401(k).

In most cases, 401(k) plans have safeguards in place to prevent excess contributions. However, you may accidentally contribute too much if you have multiple plans or if you change jobs.

Excess contributions and any earnings on them are considered taxable unless you take them out by April 15 of the following year to avoid double taxation. You must also report them on Form 1099-R when you file taxes.

Understand the 401(k) Contribution Limits for 2025 to Maximize Your Savings

The Internal Revenue Service (IRS) updates the maximum contribution limit for 401(k) plans every year. The 401(k) contribution limits for 2025 are $23,500 for basic contributions and $7,500 for catch-up contributions for those 50 and older.

Take advantage of employer matching, avoid taking out 401(k) loans or early withdrawals, and max out your contribution when possible to maximize your retirement savings.

It is also highly recommended to speak to a financial advisor on how to plan retirement financial planning.