What the new 401(k) limits and other changes mean for your retirement

Come next year, you will be allowed to save a little more in your 401(k) on a tax-deferred basis than you can this year, unless you’re in your early 60s, in which case for the first time you’ll be allowed to save a lot more.

Come next year, you will be allowed to save a little more in your 401(k) on a tax-deferred basis than you can this year, unless you’re in your early 60s, in which case for the first time you’ll be allowed to save a lot more. The new contribution limit for 401(k)s and other workplace retirement plans in 2025 will be $23,500, up from $23,000 currently, the Internal Revenue Service said Friday. The IRS did not, however, increase the limit on catch-up contributions — that’s the extra amount of money people 50 and older can contribute annually in tax-advantaged plans like 401(k)s, 403(b)s, 457 plans and the federal government’s Thrift Savings Plan. The catch-up contribution limit will remain the same at $7,500. Taken together, though, that means anyone in their 50s next year can save up to $31,000 for their retirement nest egg, and those savings will not be subject to income tax in 2025. But if you will be age 60, 61, 62, or 63, thanks to a provision in the retirement law Secure 2.0, your catch-up contribution limit will be even higher for the first time next year. The IRS said it will be set at $11,250, or 150% of the general catch-up provision. That means people at those ages can save up to $34,750. Now for an ounce of reality: Most people do not max out their 401(k) savings, whatever their applicable contribution limit.