By: Bryan Uecker, QPA, QPFC, AIF, AIFA
The IRS has announced the 2025 contribution and benefit limits in Notice 2024-80, released on November 1.
Key Contribution Limits for 2025:
- 401(k), 403(b), 457, and Thrift Savings Plans: The standard contribution limit for these plans increases to $23,500, up from $23,000 in 2024.
- Catch-Up Contributions for Ages 50 and Over: The catch-up contribution limit remains at $7,500, allowing individuals aged 50 and older to contribute up to $31,000 across 401(k), 403(b), most 457 plans, and the Thrift Savings Plan.
- Special Catch-Up Contributions for Ages 60 to 63: SECURE 2.0 introduced an additional catch-up provision for individuals ages 60 through 63. In 2025, this special catch-up amount is $11,250 for 401(k), 403(b), and most 457 plans, allowing for a total contribution limit of up to $34,750 for these participants.
- Defined Benefit and Contribution Plans (IRC Section 415): The annual benefit limit for defined benefit plans rises to $280,000 (up from $275,000), and the limit for defined contribution (DC) plans increases to $70,000 (up from $69,000).
Other Key Adjustments:
- Annual Compensation Limits: The maximum compensation considered for qualified plans is now $350,000 (up from $345,000).
- Top-Heavy Plan Key Employee Definition: Limit increased to $230,000 (up from $220,000).
- Highly Compensated Employee Definition: Raised to $160,000 from $155,000.
These 2025 updates, including special catch-up contributions for ages 60-63, provide increased flexibility and savings opportunities for retirement planning.
