2024 has come and gone, and now we are looking ahead to 2025. Here are some changes coming to your 401(k) in 2025 that may impact how you need to manage your plan.

Higher Contribution Limits

Every year, the IRS announces the contribution limits for 401(k)s and other retirement plans. For 2025, the individual employee contribution has been raised to $23,500, up from $23,000 in 2024. The catch-up contribution limit for anyone aged 50 and older is still $7,500, so those people can save up to $31,000 in 2025.

For those who have a 401(k) plan, the all-in limit (for employer and employee contributions) has been increased from $69,000 to $70,000 for 2025. Those over the age of 50 will be able to put in $77,500 depending on their income and employer contributions.

“Super Catch-Up" Contributions For Those 60-63 Years Of Age

Beginning January 1, 2025, thanks to the SECURE Act 2.0, the 401(k) catch-up limit for those age 60-63 is $11,250 – $3,750 more than the $7,500 catch-up limit for those 50 and older. That means that the all-in limit for employer and employee 401(k) contributions is $81,250. The media is calling this the “super catch-up contribution” because it is a major increase to the contribution limit for people aged 60-63 and a great way to give your nest egg a boost before retiring.

Improved 401(K) Coverage for Long-Term, Part-Time Employees

For plan years beginning on or after January 1, 2021, 401(k), plan administrators had to track employees who worked 500 or more hours in 3 consecutive years and extend eligibility for the company retirement plan. Starting in 2025, the SECURE 2.0 Act reduces the work requirement to 2 years.

Automatic Enrollment for New 401(K) Plans

Starting in 2025, all new 401(k) plans with 11 or more employees, as well as any plans established after Dec. 29, 2022, must automatically enroll eligible employees that don’t enroll on their own. The intent is to help more employees build savings for retirement. Employees can always opt out at any time. It also includes an auto-escalation feature, so the auto-enrolled deferral amount increases 1% per year until reaching 10% of the employee’s earnings. If your company has 10 or fewer employees, or if your company 401(k) was established before December 29, 2022, your 401(k) is exempt from the automatic enrollment requirement.

Key Takeaways

1. The 2025 contribution limit has been increased to $23,500 up from $23,000. The catch-up contribution limit for anyone aged 50 and older is still $7,500.
2. New in 2025 is the “super catch-up contribution”, where those aged 60-63 can now contribute up to $11,250.
3. The work requirement eligibility for part-time employees to enroll in a 401(k) plan has been reduced from 3 consecutive years down to 2 consecutive years.
4. Starting in 2025, all new 401(k) plans with 11 or more employees, as well as any plans established after Dec. 29, 2022, must automatically enroll eligible employees that don’t enroll on their own. If the company has 10 or fewer employees, or was established before December 29, 2022, it is exempt from the automatic enrollment requirement.
5. The automatic enrollment also includes an auto-escalation feature, so the auto-enrolled deferral amount increases 1% per year until reaching 10% of the employee’s earnings. Employees can always change their deferral amount or opt-out at any time.