How much can you and your employees contribute to your 401 ( k ) s or other retirement plans next year ? In Notice 2024 80 , the IRS recently announced costofliving adjustments that apply to the dollar limitations for retirement plans , as well as other qualified plans , for 2025 . With inflation easing , the amounts aren ’ t increasing as much as in recent years .
401 ( k ) Plans
The 2025 contribution limit for employees who participate in 401 ( k ) plans will increase to $ 23,500 ( up from $ 23,000 in 2024 ). This contribution amount also applies to 403 ( b ) plans , most 457 plans and the federal government ’ s Thrift Savings Plan .
The catchup contribution limit for employees age 50 or over who participate in 401 ( k ) plans and the other plans mentioned above will remain $ 7,500 ( the same as in 2024 ). However , under the SECURE 2.0 law , specific individuals can save more with catchup contributions beginning in 2025 . The new catchup contribution amount for taxpayers who are age 60 , 61 , 62 or 63 will be $ 11,250 .
Therefore , participants in 401 ( k ) plans who are 50 or older can contribute up to $ 31,000 in 2025 . Those who are age 60 , 61 , 62 or 63 can contribute up to $ 34,750 .
SEP Plans and Defined Contribution Plans
The limitation for defined contribution plans , including a Simplified Employee Pension ( SEP ) plan , will increase from $ 69,000 to $ 70,000 in 2025 . To participate in a SEP , an eligible employee must receive at least a certain amount of compensation for the year . That amount will remain $ 750 in 2025 . you !
SIMPLE Plans
The deferral limit to a SIMPLE plan will increase to $ 16,500 in 2025 ( up from $ 16,000 in 2024 ). The catchup contribution limit for employees who are age 50 or over and participate in SIMPLE plans will remain $ 3,500 . However , SIMPLE catchup contributions for employees who are age 60 , 61 , 62 or 63 will be higher under a change made by SECURE 2.0 . Beginning in 2025 , they will be $ 5,250 .
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