Good news for retirement savers! The Internal Revenue Service (IRS) has announced that 2025 401k contribution limits will increase to $23,500. This represents a $500 increase from the 2024 limit.
What does this mean for you?
- Higher Contribution Limits: You can now contribute more to your 401k plan, helping you save more for retirement.
- Increased Savings Potential: With higher contribution limits, you can potentially accelerate your retirement savings.
Other Important Changes:
- IRA Contribution Limits: The IRA contribution limit remains unchanged at $7,000 for 2025.
- Catch-Up Contributions: The catch-up contribution limit for 401k plans remains at $7,500 for most people over 50. However, it will increase to $11,250 for workers aged 60 to 63.
- Roth IRA Income Limits: The income limits for Roth IRA contributions are increasing for 2025. This means more people will be eligible to contribute to a Roth IRA.
Why is this important?
While higher contribution limits are a positive development, it’s important to remember that many Americans still fall short of their retirement savings goals. To maximize your retirement savings, consider the following:
- Automate Your Contributions: Set up automatic contributions to your 401(k) or IRA.
- Increase Your Contribution Rate: Aim to increase your contribution rate over time.
- Take Advantage of Employer Matches: If your employer offers a matching contribution, be sure to contribute at least enough to get the full match.
By taking advantage of these higher 2025 401k contribution limits and implementing effective savings strategies, you can work towards a more secure financial future.
Have retirement savings questions or in search of a provider? Reach out to us at Capital Payroll Partners and we can connect you with one of our partners that can help.
