On November 1, the IRS announced the new 401(k) plan limits for 2025. We’ve pulled together the key changes for employers in the chart below.

2025 Retirement Contribution Limits

Plan Limits20252024Difference
Maximum employee elective deferral (for ages 49 and younger)$23,500$23,000$500
Employee catch-up contributions (for ages 50-59 and 64 or older)$7,500$7,500$-
Maximum employee elective deferral (for ages 50-59 and 64 or older)$31,000$30,500$500
Employee catch-up contributions (for ages 60-63)$11,250$7,500$3,750
Maximum employee elective deferral (for ages 60-63)$34,750$30,500$4,250
Maximum employer + employee limit (for ages 49 or younger)$70,000$69,000$1,000
Maximum employer + employee limit (for ages 50-59 and 64 or older)$77,500$76,500$1,000
Maximum employer + employee limit (for ages 60-63)$81,250$76,500$4,750
Maximum employee compensation limit$350,000$345,000$5,000
Highly Compensated Employee Compensation Limitation$160,000$155,000$5,000

Employer Next Steps

As employers prepare for the 2025 plan year, administrators should make sure plan materials and participant communications include information about these changes so employees can take advantage of higher contribution limits, including:

  • A higher catch-up limit for people ages 60 to 63. Eligible employees interested in making these higher contributions shouldn’t need to take any action as payroll will automatically withhold these additional amounts.

Employers should also verify with their payroll provider that the 2025 accumulator limits have been updated to reflect each of the new limits. Most payroll providers make this change automatically, but the plan sponsor is responsible to ensure adherence. Employers need to confirm that their 401(k) plan complies with these limits when processing contributions and testing for discrimination issues.

Details on other retirement-related cost-of-living adjustments for 2025 can be found in the IRS Notice 2024-801.

  1. 2024 Limitations Adjusted as Provided in Section 415(d), etc. https://www.irs.gov/pub/irs-drop/n-24-80.pdf

Pensionmark Financial Group LLC (“Pensionmark”) is an investment advisor registered under the Investment Advisors Act of 1940. Pensionmark is affiliated through common ownership with Pensionmark Securities, LLC (Member SIPC).

Disclaimer: This communication is intended for information purposes only and should not be construed as legal or tax advice. It provider general information and is not intended to encompass all compliance and legal obligations that may be applicable to your situation. This information and any questions as to your specific circumstances should be reviewed with legal counsel and /or a tax professional.

Kevin Takinen — Kevin is a Manager of Financial Services with Sequoia Consulting Group where he works closely with clients to evaluate and recommend retirement plan changes specific to each client’s needs. This includes optimizing plan design, providing investment due diligence, benchmarking, and fiduciary guidance. He’s been in the retirement & financial services industry for over 15 years. Outside of work, Kevin enjoys biking with his family, building Lego with his son, and reading a good book.