By Linda L. Cox, ERI Economic Research Institute
It’s that time of year once again when the U.S. Internal Revenue Service (IRS) has announced its 2025 limitations on retirement plans for the 2025 tax year.
The 401(k) retirement maximum contribution limit has been raised from $23,000 to $23,500 for elective deferrals in 2025, with the maximum contribution increasing from $69,000 to $70,000 for all sources (employee and employer). Human resources and payroll should update their systems and employee communications, as appropriate, reflecting changes effective January 1, 2025.
The IRS has also announced the Individual Retirement Account (IRA) limits effective January 1, 2025. The IRA retirement annual contribution limit for 2025 remains at $7,000. If you are over the age of 50, then the annual catch-up contribution not subject to annual cost-of-living adjustment remains at $1,000.
*If age 50+ by year end
Additional information and technical guidance may be found in the IRS source documents below:
IRS Announces 401(k) Limit Increases to $23,500 and IRA Limit Remains $7,000
