The 401(k)cap will soon be updated by the IRS. By 2025, it will actually increase to $23,500. If you have an IRA account, though, your limit is still $7,000.
In 2024, the IRS set a $23,000 contribution cap for 401(k) savings accounts. Because it will only increase by $500, the gain will not be significant.
IRS highlight of changes for 2025
The 2025 401(k) contribution cap will be altered by the IRS, and there are other significant changes that people should take into account. Like the 401(k), the annual contribution cap for employees in the government’s 457 plans, the federal government’s Thrift Savings Plan, and 403(b) plans will rise to $23,500.
You might wish to find out the 2025 maximum for catch-up contributions if you have a 401(k) and are 50 years of age or older. Regretfully, it stays the same, so in 2025 it will cost $7,500 once more for:
- 401(k)
- 403(b)
- gov. 457 plans
- Fed Thrift Savings plans
Because of this, people who are 50 years of age or older can make up to $31,000 annually.
IRS unveils higher catch-up contribution limit for employees 60-63
Employees 60, 61, 62, and 63 who are enrolled in Fed Thrift Savings, 401(k), 403(b), and government 457 plans have good news. Their maximum catch-up contribution will be increased to $11,250.
Just so you know, it’s just $7,500 in 2024. If they are eligible and have enough money, those between the ages of 60 and 63 can donate $3,750 more than they could in 2024. It will definitely come in handy when you retire.
The $1,000 catch-up contribution cap for IRA accounts held by people over 50 will remain in effect in 2025. The following is another intriguing feature of IRA.
The income thresholds for determining eligibility to claim the Saver’s Credit for the upcoming year and make deductible contributions to Roth and conventional IRAs have been extended by the IRS.
For 2025, the IRS limit remains at 7000. Source: https://www.irs.gov/newsroom/401k-limit-increases-to-23500#:~:text=WASHINGTON20%E2%80%94%The internal percentageRevenue, Service, and Up%20 percent20%2423%2C000%20 for 2024.
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Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.