The IRS has introduced new 401(k) contribution limits for 2025.

In its launch Friday, the company elevated the worker deferral restrict to $23,500, up from $23,000 in 2024. The change applies to office plans, together with 401(okay)s, 403(b)s and most 457 plans, together with the federal Thrift Financial savings Plan. 

The IRS additionally unveiled 2025 catch-up contribution limits for savers age 50 and older, individual retirement account savings limits and better income thresholds for Roth IRA contributions.  

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Beginning in 2025, the 401(okay) catch-up contribution limit will stay at $7,500 for savers 50 and older. However buyers aged 60 to 63 can as an alternative save an additional $11,250, based mostly on adjustments enacted via Secure 2.0. Each quantities are above the $23,500 deferral restrict for 2025.  

In 2023, solely 14% of workers deferred the maximum quantity into 401(okay) plans, in line with Vanguard’s 2024 How America Saves report, which included knowledge from 1,500 certified plans and practically 5 million contributors.

Throughout plans, the typical 401(okay) deferral fee was an estimated 7.4% in 2023, in line with the identical report. The combined savings rate, together with employer contributions, was 11.7%, Vanguard discovered.