The Internal Revenue Service (IRS) has increased the annual contribution limit for 401(k) and other retirement plans to $23,500 for 2025, reflecting inflation.
It's officially 2025 and a good time to reassess your retirement planning. The Internal Revenue Service ( IRS ), in November, announced that it had increased the amount that individuals can contribute to their 401(k) and other retirement plans to account for inflation.Each year, the IRS reviews tax thresholds and limitations for various retirement accounts and considers making a cost-of-living adjustment based on the impact of inflation since the previous change occurred.
For the 2025 tax year, the IRS is increasing the annual contribution limit for 401(k) plans by $500 from the current limit of $23,000 in 2024 to $23,500 in 2025.Those limits also apply to several other retirement plans and will undergo the same increase for the 2025 tax year, including 403(b) retirement plans, governmental 457 plans and the federal government's Thrift Savings Plan.IRS SETS NEW TAX BRACKETS, RAISES STANDARD DEDUCTION FOR 2025The IRS also considers adjustments to the contribution limits for Individual Retirement Accounts (IRAs), including traditional and Roth IRAs. However, the IRS will hold the IRA annual contribution limits constant from 2024 to 2025 at $7,000. It's also maintaining the IRA catch-up contribution limit for individuals aged 50 and over at $1,000 for 2025.The catch-up contribution limit that applies to employees aged 50 and up enrolled in most 401(k), 403(b), governmental 457 plans and the Thrift Savings Plan will remain at $7,500 for 2025. Workers who are 50 and older can generally contribute up to $31,000 annually to those retirement plans starting in 2025 under changes made with the enactment of the SECURE 2.0 Act of 2022. YELLEN TOUTS IRS ENFORCEMENT AS HELPING CLOSE THE BUDGET DEFICITThat law also created a higher catch-up contribution limit for workers aged 60 to 63 who participate in those plans — which will be increased to $11,250 instead of $7,500 in 202
Retirement 401(K) IRS Contribution Limit Inflation
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