401(k) Contribution Limits Increased for 2025
At Fiat Wealth Management, we’re always keeping an eye on what’s new in the retirement planning world—and this one’s worth celebrating. For 2025, the IRS has announced an increase in the annual contribution limits for 401(k) plans. That means more room to save, invest, and grow your retirement future.
What’s Changing in 2025?
The new 401(k) contribution limit for individuals is $23,500, up from $23,000 in 2024. If you're age 50 or older, you can also make catch-up contributions of an additional $7,500, bringing your total potential contribution to $31,000.
This increase helps you take even greater advantage of tax-deferred growth (or tax-free growth if you’re using a Roth 401(k)). Over time, an extra $500 per year, compounded with market returns, can make a noticeable difference—especially if you're ramping up your savings in your peak earning years.
Why This Matters
Whether you're just starting to invest or nearing retirement, contribution limits are a key part of your financial plan. Every dollar you invest in a 401(k) reduces your taxable income (for traditional 401(k)s) and allows your money to grow without immediate taxation.
For many people, employer-sponsored plans like 401(k)s are the backbone of retirement savings. An increased limit is an opportunity to reassess your contribution rate, see if your current strategy is on track, and explore whether increasing your contributions aligns with your goals.
How to Take Advantage
Here are a few tips as we head into 2025:
- Review your current contribution rate. Are you maxing out or close to it?
- Check in with your advisor. This is a great time to revisit your retirement plan and investment allocations.
- Plan for catch-up contributions. If you’re 50+, this is a powerful tool to accelerate your savings.
- Update your payroll settings. If you want to increase your contributions, now’s the time to notify HR or update your employee portal.
At Fiat Wealth Management, we believe retirement planning is personal—but staying on top of the numbers is universal. Let us know if you want to review your 401(k) strategy or explore ways to make the most of these new limits in 2025.
Plan your meeting today!
952.426.9116 | hello@fiatwm.com
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