New Retirement Plan Contribution Limits Announced for 2025
If you are aged 60-63, you can now contribute $34,750 to your 401(k), 403(b), or 457 plan.
The IRS has announced significant changes to 401(k) contribution limits for 2025, creating an unprecedented opportunity for savers — especially those nearing retirement. For the first time ever, individuals aged 60 to 63 can take advantage of a “super catch-up” contribution, allowing them to contribute up to $34,750 to their 401(k) accounts. These adjustments, aimed at helping Americans bolster their retirement savings, come at a critical time for those looking to secure a stronger financial future.
Let’s break down what these new limits mean for different age groups, including self-employed individuals, and how these changes could affect your retirement planning strategy.
Unprecedented “Super Catch-Up” for Ages 60-63
Historically, 401(k) plans have included a “catch-up” contribution for workers aged 50 and over. This provision allowed them to contribute more than the standard limit, offering an extra savings boost as retirement approached. But the new “super catch-up” provision for ages 60-63 is a first. In 2025, individuals in this age group can contribute an additional $11,250 on top of the standard 401(k) limit, allowing for a total contribution of up to $34,750. The rule also applies for those working for non-profit or government employers offering 403(b) or 457(b) plans. Eligibility is based on the participant’s age on December 31st of the contribution year.
This substantial increase recognizes the reality that many Americans may not have had the chance to save enough earlier in their careers. By offering this super catch-up, the IRS is giving those in their early 60s a final opportunity to accelerate their retirement savings before they transition out of the workforce. For many, this could be the boost they need to reach their retirement goals.
2025 Standard Contribution Limits
For all workers, the standard contribution limit for 401(k) plans has increased to $23,500 in 2025, up from $23,000 in 2024. This adjustment reflects the IRS’s annual cost-of-living increase, intended to help Americans save in line with inflation.
For those aged 50 and over, the regular catch-up contribution remains steady at $7,500. This means that individuals aged 50-59 can contribute a total of $31,000 to their 401(k) in 2025. For those between 60 and 63, however, the super catch-up provides the potential to save an even greater amount.
Why This Matters: For employees of all ages, increased limits create more opportunities to grow tax-deferred savings. But for those approaching retirement, these higher limits can be especially impactful, helping them close savings gaps they may face.
Retirement Savings Opportunities for Self-Employed Individuals
Self-employed individuals also benefit from updated contribution limits for 2025. Here’s a quick look at the changes:
- Solo 401(k) and SEP IRA: For self-employed individuals, the combined employee and employer contribution limit has increased to $66,000 for 2025. This significant cap allows business owners and freelancers to maximize tax-deferred contributions in a big way, combining personal contributions with business contributions up to the limit.
- SIMPLE IRA: The contribution limit for SIMPLE IRAs has increased to $16,500 for 2025, with an additional catch-up contribution of $3,500 for those aged 50-59, and above 63. The Super Catch-up for those aged 60-63 is $5,250. This plan, typically used by small businesses, remains a competitive choice for employers looking to offer a retirement plan without the administrative demands of more complex plans.
These changes provide self-employed individuals with substantial opportunities to save for retirement, often at higher levels than employees of large organizations. They also offer flexibility in choosing the right plan, whether they prefer the Solo 401(k) for its higher cap or the SIMPLE IRA for its ease of setup.
IRA Contribution Limits for 2025
For individuals who also save in IRAs, the IRS has announced that contribution limits will be unchanged from 2024:
- Under 50: The maximum contribution limit remains $7,000.
- 50 and Over: Those 50 and above can contribute up to $8,000.
While these limits are lower than those for 401(k) plans, IRAs still serve as an essential tool for retirement savings, especially for individuals who may not have access to an employer-sponsored plan or who want additional tax-advantaged space to save. Keep in mind that income restrictions apply to both Traditional and Roth IRAs, which can affect eligibility for deductible contributions (Traditional) or contributions at all (Roth).
How These Changes Can Impact Your Retirement Plan
The 2025 contribution limit increases represent a significant opportunity, especially for those nearing retirement age. If you’re in the 60-63 age group, the super catch-up could be the final piece that helps you achieve a secure retirement. But these changes affect more than just the largest savers; individuals at every career stage now have higher limits and a greater capacity to build wealth.
Planning Strategies to Consider:
- Maximize Contributions Early in the Year: If possible, consider front-loading your contributions to maximize time in the market.
- Explore Both Employer-Sponsored and Individual Options: Combining a 401(k) with IRA contributions can offer additional flexibility and tax advantages.
- Consult with a Financial Advisor: With new options come new decisions. A financial advisor can help you align your contributions with your long-term financial goals, tax strategies, and specific needs, ensuring that you make the most of the updated limits.
The 2025 changes to retirement plan contributions offer exciting new opportunities for savers, especially those nearing retirement age. For those aged 60 to 63, this could be a turning point in their financial planning, offering a chance to catch up on savings and prepare for a secure retirement. For younger savers and self-employed individuals, increased limits also create fresh possibilities for tax-advantaged growth.
If you have any questions about how these changes could affect your retirement plan or how to make the most of the new limits, don’t hesitate to reach out. At Legacy, we’re committed to helping you navigate these updates and take advantage of every opportunity to secure your financial future.
Sam Murray, AIF®
Retirement Programs Manager
