2025 401(k) Contribution Limits: A Guide for Business Owners
As 2025 begins, it’s essential for business owners to be aware of the new 401(k) contribution limits set by the IRS to insure you are providing the right benefit for your employees.
Key Contribution Updates
Starting January 1, 2025, the 401(k) contribution limit will increase to $23,500, up from $23,000 in 2024. The catch-up contribution for employees aged 50+ remains $7,500, allowing them to save up to $31,000 annually. A new, higher catch-up limit of $11,250 applies to participants aged 60-63. Additionally, there are also increased contribution limits for Simple IRA’s and HSA.
| LIMIT | 2025 | 2024 |
|---|---|---|
| Employee deferral limit | $23,500 | $23,000 |
| Catch-Up Contribution (between 50-59 years of age) | $7,500 | $7,500 |
| Catch-Up Contribution (between 60-63 years of age) | $11,250 | $7,500 |
| Annual Compensation Limit | $350,000 | $345,000 |
| Highly Compensated Employee Limit | $160,000 | $155,000 |
| SIMPLE IRA/SIMPLE 401(k) Contribution | $16,500 | $16,000 |
| HSA Contribution (single) | $4,300 | $4,100 |
| HSA Contribution (family) | $8,550 | $8,300 |
401(k) and 403(b) Plans
Chart provided by IMA Retirement
Steps for Business Owners
- Ensure the Right Plan: Whether it’s the Colorado Secure Savings Program, the StaffScapes 401(k) or a Simple IRA, consider new contribution limits when choosing a plan.
- Educate Employees: Inform staff about these changes and use this opportunity to educate your employees on the benefit of saving for retirement.
- Reevaluate Benefits Packages: Align 401(k) contributions with other benefits to remain competitive. Review if your employer match and explore benefits such as Employee Assistance Programs.
Planning for the Future
Offering competitive retirement benefits while promoting robust saving habits among employees positions your business as an attractive, supportive employer.
For further assistance or guidance, feel free to contact StaffScapes.