Knowing the 401k contribution limits for 2025 will help secure your retirement future. The IRS has set the employee contribution limit at $23,500 for 2025, which matches the 2024 amount of $23,000. Your retirement consultant in Fresno CA will explore how the total possible contribution including employer matches increases by a lot to $70,000.
Catch-up contributions give older workers a great chance to boost their retirement savings. Workers who are 50 or older can add an extra $7,500 beyond the standard limit. Starting in 2025, people between ages 60 and 63 will qualify for a bigger catch-up amount of $11,250, which could push their max 401k contribution for 2025 to $34,750. We have put together strategic moves you can make before year-end to maximize these tax-advantaged accounts.
401(k) Contribution Limits for 2025
The IRS just released new 401(k) contribution limits for 2025. Retirement savers can now put away more money. Workers can contribute up to $23,500, which is $500 more than the 2024 limit. This new limit applies to both pre-tax and Roth contributions throughout the year.
The combined limit for employer and employee contributions will be $70,000 in 2025. This is a big deal as it means that you can save $1,000 more than the 2024 limit of $69,000. The limit applies unless your compensation is lower – then it’s capped at 100% of what you earn.
Here’s how catch-up contributions work based on your age:
Ages 50-59: You get a standard catch-up of $7,500, letting you contribute up to $31,000
Ages 60-63: You can add $11,250 extra thanks to the SECURE 2.0 Act, bringing your total possible contribution to $34,750
8 Last-Minute Moves to Maximize Your 401(k) in 2025
The end of the year is approaching, and you still have time to boost your retirement savings. Here are eight smart ways to make the most of your 401(k) in 2025:
Capture your full employer match – Your company’s 50% match on up to 6% of your salary can add up quickly. With a $75,000 salary, you could get $3,000 in free money each year. This amount could grow beyond $300,000 over 30 years with investment returns.
Direct your bonus to your 401(k) – You can put part or all of your year-end bonus toward reaching contribution limits faster. Just make sure your employer’s plan allows bonus deferrals.
Advanced Strategies for High Earners
High-income earners struggle to maximize their retirement savings because of IRS income limits. The Backdoor Roth IRA offers a smart solution for people who earn more than the 2025 thresholds – $165,000 for single filers or $246,000 for married couples filing jointly.
The strategy is straightforward. You can contribute to a traditional IRA (up to $7,000 if under 50, or $8,000 if 50+) and then convert those funds to a Roth IRA. While you’ll pay ordinary income tax on the conversion, your future earnings grow tax-free.
The mega backdoor Roth strategy takes this concept further and lets high earners save much more. Here’s how it works:
Make after-tax contributions to your 401(k)
Convert those contributions to a Roth IRA or Roth 401(k)
Conclusion
We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to see how we can help you Retire ”Your Way!”
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Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. The commentary on this website reflects the personal opinions, viewpoints, and analyses of the author, Soutas Financial, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security, or any security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Foundations deems reliable any statistical data or information obtained from or prepared by third party sources that is included in any commentary, but in no way guarantees its accuracy or completeness.
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