401(k) and IRA contribution limits in 2025: What’s new this year
Quick takeaways
- In 2025, the 401(k) contribution limit for participants is increasing to $23,500, up from $23,000 in 2024.
- Participants who are 50–59 and 64+ can save an additional $7,500 in 2025 in catch-up contributions.
- There’s a brand new extended catch-up contribution provision for savers aged 60 to 63. They can save up to $11,250 instead of the normal $7,500 in 2025.
- In 2025, the combined employer and employee contribution limit is increasing to $70,000, up from $69,000 in 2024.
No matter where you are on your path to retirement, a 401(k) can help you plan for your financial future. 401(k) retirement plans come with tax advantages, which means you can save money tax-deferred—but the Internal Revenue Service (IRS) limits how much you can put away with those advantages each year.
There are a lot of factors that can help you determine how much you should save for retirement, including your income, where you live, and what your personal retirement goals look like. But this post focuses on how much you're actually allowed to save annually.
Below we’ll deep dive on all things contribution limits: what they are, how they’re determined, and how much you and your employer can contribute to different retirement plans this year.
What are contribution limits?
Contribution limits cap how much employees and employers can contribute to a retirement plan in a given year.1 The IRS re-evaluates these limits annually based on factors like inflation and the cost of living. The limits were established to help create fairness in retirement savings, ensuring that higher income earners don’t benefit more from a 401(k) than those with a more modest salary.
Inflation and cost of living increases have hit hard since the pandemic. Guideline COO Jeff Rosenberger says the 2025 limit increases are expected given the macro environment:
"We are happy to see the contribution limit increases for 2025. With the higher inflation over the last few years it is important to enable US workers to save more for their retirement."
Jeff Rosenberger
COO, Guideline
401(k) contribution limits in 2025
Employee contribution limits
Employee contribution limits for 401(k) have increased for 2025. Employees can contribute up to $23,500 in 2025, an increase from $23,000 in 2024. Note that employees can never contribute more than their total compensation for the year.
Contribution limits over 50
Catch-up contributions are designed to help employees further along in their careers save even more money for their future. People aged 50 or older are eligible to make additional contributions to their 401(k) plans since they're getting closer to retirement age and may need to "catch up" in their savings.
Starting in 2025, the SECURE 2.0 Act extended the catch-up limit for people between ages 60 and 63 and our data shows that 55% of eligible savers were not aware of this elevated catch-up coming in 2025.2 For 2025, the base catch-up limit stays the same as 2024 at $7,500 while those eligible for the extended catch-up will have a catch-up limit of $11,250.
So starting in 2025 the total employee contribution limit is going to depend on how old you will turn that year:
| Age in 2025 | Total contribution limit |
|---|---|
| Under age 50 | Just the normal deferral limit of $23,500 |
| Between ages 50–59 | The normal deferral limit of $23,500 plus the standard catch-up of $7,500 for a total of $31,000 |
| Between ages 60–63 | The normal deferral limit of $23,500 plus the extended catch-up of $11,250 for a total of $34,750 |
| Age 64 and over | The normal deferral limit of $23,500 plus the standard catch-up of $7,500 for a total of $31,000 |
Employer contribution limits
In 2025, the combined limit for employee and employer contributions will be $70,000 or 100% of the employee's salary, whichever is lower. The limit is $77,500 if the employee is age 50–59 or 64 and over and making catch-up contributions (or $81,250 if between the ages of 60–63). Employers can support their team members’ retirement goals by offering to make employer contributions. Employer contributions don't impact the individual annual contribution limit. That's because the IRS has a higher combined limit for employee and employer contributions. These higher contribution limits also apply to those contributing to a Solo(k) who are eligible to make both employee and employer contributions.
Starter 401(k) contribution limits
The contribution limits are $6,000 per employee and $1,000 in catch-up contributions for employees aged 50 and older in 2025. Employers are not allowed to contribute.
2025 will mark the second year of Starter 401(k) plans. These plans were created to encourage more employers to offer retirement benefits to their employees. These plans automatically satisfy compliance tests and have fewer employer requirements, but lower contribution limits than a standard 401(k).
Limits for highly-compensated employees
If your annual earnings exceed a certain threshold, the IRS may designate you as a highly compensated employee (HCE). HCEs are subject to additional limitations when it comes to retirement contributions to ensure that they do not unfairly benefit from the tax-advantaged savings. For example, an HCE’s total retirement contributions generally can’t exceed 2% of non-HCEs’ total contributions. In 2025, the threshold to be considered an HCE rises to $160,000 earned in the prior year (up from $155,000 in 2024). Note that this restriction does not apply to Starter 401(k) plans and does not apply to safe harbor 401(k) plans.
There are other limits that apply to 401(k) plans, such as the annual compensation limit and the employer deduction limit.
IRA contribution limits
Traditional and Roth IRA contribution limits
The 2025 limit on annual contributions to an IRA will be $7,000, the same as 2024. The 2025 catch‑up contribution limit for individuals aged 50 and over will stay at $1,000, the same rate from 2024.
In addition to the contribution limits, the limits to deduct a traditional IRA contribution or make a Roth IRA contribution also changed. You can find more information here.
SEP IRA contribution limits
SEP plan IRA contribution limits for 2025 will be $70,000, up from $69,000 in 2024. The contributions can't be more than 25% of the employee's compensation. With a SEP, which is short for Simplified Employee Pension plan, contributions are only made by the employer. These flexible IRA plans are tax-deferred, have larger contribution limits, and have fewer administration requirements than other retirement plans.
2025 retirement account contribution limits
To recap, here's an overview of the 401(k) contribution limits for 2025.
| 2024 | 2025 | |
|---|---|---|
| Standard 401(k) | ||
| Employee contribution limit | $23,000 | $23,500 |
| Employee + employer contribution limit | $69,000 | $70,000 |
| Catch-up contribution limit | $7,500 | $7,500 |
| Extended catch-up contribution limit for 60–63 year olds | Not allowed | $11,250 |
| Starter 401(k) | ||
| Employee contribution limit | $6,000 | $6,000 |
| Employer contribution limit | Not allowed | Not allowed |
| Catch-up contribution limit | $1,000 | $1,000 |
| Traditional and Roth IRA | ||
| Employee contribution limit | $7,000 | $7,000 |
| Catch-up contribution limit | $1,000 | $1,000 |
| SEP IRA contribution limit | $69,000 | $70,000 |
401(k) contributions FAQ
We know there’s a lot more to consider than annual contribution limits when determining how much to save for retirement. Below we’ve answered a few frequently asked questions about 401(k) plans that might help you choose how to approach your retirement goals this year.
Should I max out my 401(k)?
Maxing out your 401(k) means contributing the maximum employee contribution permitted by the IRS in a given year. If you're able to contribute that amount, that's great! We advocate for trying to save as much as possible, to the extent it makes sense for your own goals and budget. By saving more, you can reap the rewards of a 401(k), like reducing your taxable income and earning compound interest, which can help grow your savings over time. Remember—it’s always a good idea to speak with an investment or tax professional to determine your personal retirement strategy.
Can I contribute to more than one 401(k)?
Yes, you can contribute to more than one 401(k), but be aware that your employee contribution limits include all your 401(k) accounts, plus a few others. That means in 2025, you'll only be able to contribute up to $23,500 across all your 401(k) accounts and not $23,500 to each (limit also includes employee contributions to 403(b)s, Salary Reduction Simplified Pension Plans (SAR-SEPs), and Savings Incentive Match Plans for Employees (SIMPLE-IRAs)).
What can I do if I over-contribute to my 401(k)?
If you contribute too much to your 401(k) and catch it in time, you can fix the mistake. You'll need a corrective distribution, which means taking the excess money (and any amounts earned thereon) out of the account. If you have accounts outside of Guideline that count towards your limit, you can report these outside contributions to Guideline as long as they are reported by March 1 of the following year. The corrective distribution must be made by tax day. Guideline helps savers avoid exceeding their contribution limit by automatically adjusting contribution rates as they near the limit.
Give your employees a roadmap to retirement
With Guideline, you can provide an impactful work benefit while minimizing paper work and fees