IRS raises 401(k) contribution limits, adds super catch-up for 60-63 year olds in 2025

Americans will be able to sock away more in their workplace retirement plans, before taxes, in 2025.

The IRS said on Friday it increased the annual employee deferral limit to $23,500, from $23,000 in 2024, for workplace plans, including 401(k)s, 403(b)s, governmental 457 plans and the federal government’s Thrift Savings Plan. Catch-up contributions for those participants aged 50 and up will remain at $7,500, which means their total contribution for 2025 is capped at $31,000.

In 2023, only 14% of employees maxed out their workplans, according to Vanguard's How America Saves report. In plans offering catch-up contributions, 15% of participants 50 or older contributed more, it said.

Starting in 2025, employees aged 60 to 63 years old who participate in one of those work plans have a higher catch-up contribution limit. That cap is $11,250, instead of $7,500.

"Once you hit age 64, you are no longer eligible for a super catch-up contribution and are limited to the regular catch-up contribution amount," said certified public accountant Richard Pon in San Francisco, California.

But remember, "right now, technically, there is no law that says that employers must offer a super catch-up contribution so I believe an employer’s retirement plan must be amended to specifically allow for a super catch-up contribution."

What are the IRA limits in 2025?

The limit on annual contributions to an IRA remains $7,000. The IRA catch‑up contribution limit for individuals aged 50 also stayed at $1,000 for 2025, after a cost-of-living adjustment, the IRS said.

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Did income ranges change for contributions to traditional and Roth IRAs?

Yes, the income ranges to determne eligibility to make deductible contributions to a traditional IRA, to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2025, the IRS said.

Here are the phase‑out ranges for 2025:

• For single taxpayers covered by a workplace retirement plan, the phase-out range rose to between $79,000 and $89,000, from $77,000 to $87,000.
• For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range increased to $126,000 to $146,000, from $123,000 to $143,000.
•  For an IRA contributor not covered by a workplace retirement plan and married to someone who is covered, the phase-out range is $236,000 to $246,000, up from $230,000 and $240,000.
• For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
• The income phase-out range for taxpayers making contributions to a Roth IRA is $150,000 to $165,000 for singles and heads of household, up from $146,000 to $161,000. For married couples filing jointly, the income phase-out range rose to between $236,000 and $246,000, from $230,000 to $240,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA isn't subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
• The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $79,000 for married couples filing jointly, up from $76,500; $59,250 for heads of household, up from $57,375; and $39,500 for singles and married individuals filing separately, up from $38,250.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.