Big changes are just a few weeks away.
The 401(k) is a go-to account for workers to build their retirement savings, and the IRS has just announced updates that could shake things up in 2025.
On Nov. 1, the 2025 contribution limits were unveiled — and they are bigger than ever. Plus, there are a few other significant changes on the horizon that you’ll want to keep on your radar as the new year approaches.
We’ve scoured the new rules to highlight some of the biggest changes that could impact your retirement strategy in 2025.
1. 401(k) contribution limits are getting a boost
If you like to go big and max out your retirement accounts, you’ll appreciate the latest news: The IRS is bumping up the standard contribution limit for 401(k) plans to $23,500 in 2025. That’s up from $23,000 in 2024.
You can go with a traditional 401(k), where your contributions are tax-deferred, or a Roth 401(k), where you pay taxes up front, but enjoy tax-free withdrawals in retirement. Want the best of both worlds? You can stash cash in both accounts if your employer offers them, as long as your total contributions don’t exceed the annual limit.
One of the perks that makes the 401(k) so appealing is that your employer may also contribute to your account. Be sure to check how much your employer might contribute in 2025 and what steps you need to take to claim the maximum amount. Remember, there’s also a combined limit for employer and employee contributions, which is increasing to $70,000 in 2025 for workers under 50.
Here’s a quick summary of the updated contribution limits for 2025 to help you plan ahead:
| 401(k) plan limits | 2025 | 2024 |
|---|---|---|
| Maximum elective deferral for employees | $23,500 | $23,000 |
| Total contribution limit for employer and employee combined | $70,000 | $69,000 |
Data source: IRS. Table by author.
2. Catch-up contribution limits are changing for some employees
Older workers get to sock away even more with catch-up contributions. For most folks 50 and up, the limit stays at $7,500 in 2025. That’s the same as 2023 and 2024. Add that to the standard contribution limit, and you’re looking at up to $31,000 in total personal contributions.
But here’s the big change for 2025: Workers aged 60, 61, 62, and 63 get a super catch-up contribution, thanks to Secure 2.0. Essentially, these employees can stash up to an extra $11,250 instead of the usual $7,500 in their 401(k). Be sure to check with your employer to see how this works and confirm they’re on board.
When you add up the total personal contribution limit for those 60 to 63, it comes out to $34,750. Toss in employer contributions, and the total contribution for those in this age group jumps to $81,250 for 2025.
Check out some of the updated contribution limits for workers 50 and older in 2025.
| 401(k) plan limits | 2025 | 2024 |
|---|---|---|
| Maximum elective deferral for most employees age 50 and older (including catch-up contributions) | $31,000 | $30,500 |
| Maximum elective deferral for employees 60, 61, 62, and 63 (including catch-up contributions) | $34,750 | $30,500 |
| Total contribution limit for employer and employee combined (for most employees age 50 and older) | $77,500 | $76,500 |
| Total contribution limit for employer and employee combined (employees 60, 61, 62, and 63) | $81,250 | $76,500 |
3. Automatic enrollment happens soon
Enrolling in a 401(k) plan can feel like a hassle if you’re not familiar with how it works at your company. You might even miss out on the benefits of a 401(k) simply because you didn’t know how to sign up. But starting in 2025, that’s about to change.
Under the SECURE 2.0 Act, many employers will be required to automatically enroll new employees in 401(k) plans. Find out if your employer is exempt from this requirement. If not, find out what the default contribution rate will be, and if it will be expected to increase going forward. The default contribution rate will start at a minimum of 3%.
This change makes it easier for employees to start saving for retirement without needing to navigate the enrollment process themselves. But if this isn’t your cup of tea, you can opt out if needed, or adjust your contribution rate to fit your goals.
Get ready for the new year
You still have a few weeks before 2025 arrives. Take this time to review the 401(k) changes, and set your goals for the new year. Also, think about other retirement accounts, like traditional and Roth IRAs, and see what changes are coming next year. Plan ahead now, and you’ll be well on your way to crushing your retirement goals in 2025.