The Internal Revenue Service (IRS) recently announced that individual contributions to 401(k) plans will increase to $23,500 in 2025 up from $23,000 in 2024.

The increase limit applies to employees who participate in 401(k), 403(b), government 457 plans and the federal government’s Thrift Savings Plan.

The limit on annual contributions to an IRA remains $7,000 for 2025.  The IRA catch-up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 to include an annual cost-of-living adjustment but remains at $1,000 for 2025.

The catch-up contribution limit that applies to employees 50 and over who participate in 401(k), 403(b), government 457 plans and the federal governments Thrift Saving Plan who are 50 and older generally can contribute up to $31,000 each year, beginning in 2025.  Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in such plans.  For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500.