The Internal Revenue Service (IRS) has announced changes to retirement plan contribution limits for 2025. These adjustments aim to help Americans save more for their post-work lives. Starting next year, workers aged 60 to 63 will be able to contribute an extra $11,250 in catch-up contributions to their 401(k) or similar employer-sponsored retirement plans.
This is on top of the standard catch-up contribution of $7,500 for those 50 and older. The general employee deferral limit for workplace plans like 401(k)s, 403(b)s, and 457 plans will increase to $23,500 in 2025, up from $23,000 in 2024. With the catch-up contribution, workers 50 and older can contribute a total of $31,000.
However, the new “super” catch-up contribution of $11,250 is only available to those aged 60, 61, 62, and 63.
Irs raises 401(k) contribution caps
Once savers turn 64, they are no longer eligible for this enhanced catch-up but can still contribute the standard catch-up amount.
David John, a senior strategic policy adviser at the AARP Public Policy Institute, said, “This is an opportunity to make up for mistakes from the past.”
The IRS also adjusted income ranges for determining eligibility for traditional and Roth IRA contributions. For single taxpayers covered by a workplace retirement plan, the phase-out range has increased to between $79,000 and $89,000. For married couples filing jointly, the range is now $126,000 to $146,000 if the spouse making the IRA contribution is covered by a workplace plan.
The Saver’s Credit income limit, designed to encourage low- and moderate-income workers to save for retirement, has also been adjusted. For married couples filing jointly, the limit is now $79,000, up from $76,500. For heads of household, it has increased to $59,250, and for singles and married individuals filing separately, the limit is now $39,500.
These changes come as part of an effort to encourage Americans to save more for retirement, especially as traditional pensions become less common and the population ages.
