On Friday, November 1, the IRS announced the retirement plan limits that will take effect on January 1, 2025. Most notably, the annual contribution limit for participants in 401(k), 403(b), and governmental 457 plans was increased to $23,500, up from $23,000. The catch-up contribution limit for those aged 50 and older is unchanged for 2025, at $7,500. The higher catch-up contribution limit, brought in by SECURE 2.0, for employees aged 60-63 is $11,250 instead of $7,500. These increases are more modest than prior years, but still impactful in employees’ ability to save long-term.
For more information on the various cost-of-living adjustments for 2025, see IRS Notice 2024-80, or contact Kelly Smith Hathorn.