Key points 

• Employees can invest more money into 401(k) plans in 2025, with contribution limits increasing from $23,000 in 2024 to $23,500 in 2025.
• The limit on catch-up contributions remained $7,500 for employees 50 or over in 2025, though the IRS is raising the catch-up contribution limit for individuals aged 60 to 63, who will be able to add an additional $3,750 to their 401(k) plans on top of the $7,500.
• The definition of a “highly-compensated employee” – and individual who faces different limits on contributions – increased from $155,000 in 2024 to $160,000 in 2025.  

As you contemplate how to get started, consider how the 401(k) contribution limits can fit into your overall income and savings goals. For example, you could have a trickier time budgeting from month to month because a larger portion of your income may go to saving for retirement. However, when you see how much of an impact saving can have on your retirement savings, you may decide that contributing the annual max 401(k) amount can benefit your retirement savings plan over the long-term.

In this piece, we’ll review the 401(k) contribution limits for 2024 and 2025. We’ll also go over employer-employee combination contribution limits and the highly compensated contribution limits. Finally, we’ll review traditional and Roth IRA contribution limits.

401(k) contribution limits in 2024 and 2025

First, what are contribution limits? Contribution limits are set by the IRS and refer to the amounts that can be contributed to a 401(k) each year. The maximum deferral limit refers to the annual amount that an employee can defer from their pay to a 401(k) plan.  The maximum contribution amount, on the other hand, refers to the total amount of funds both the employee and employer can contribute during the year.  Total contributions cannot exceed 100% of an employee’s annual compensation.

In the past, the 401(k) contribution limits have gone up incrementally, typically about $500 each year. For example, in 2017, the contribution limit was $18,000 and the maximum catch-up contribution was $6,000. The contribution limits for employees have generally gone up $500 per year since then.

Let’s look at the 401(k) contribution limits¹ in 2025 compared to 2024:

These amounts also apply to 403(b) plans, and most 457(b), as well as the federal government’s Thrift Savings Plans. A 403(b) plan is an employer-sponsored retirement plan that’s very similar to a 401(k) plan. The key difference is that 403(b) plans are offered by public schools, churches, and 501(c)(3) non-profit organizations. The IRS typically announces official limits for the coming year in late October or early November.

Read more: 401(k) vs 403(b): What's the difference?

Employer and employee 401(k) contribution limits

You cannot go over a specified limit for total plan contributions, which applies to the sum of elective deferrals, employer matching contributions, and employer non-elective contributions. We define all these below.

• Elective deferrals: Refers to amounts of money you elect to defer from your pay and into your employer’s retirement plan.
• Employer matching contributions: Refers to contributions your employer makes to your retirement plan account if you contribute to the plan from your salary. Here’s an example of a common 401(k) matching formula: 50 cents on the dollar up to 6% of the employee’s pay. Not taking advantage of the match means you miss out on additional money in your account, so it’s usually advantageous for you to contribute enough to get the match.
• Employer non-elective contributions: When an employer contributes to an employee in an employer-sponsored retirement plan (whether the employee contributes or not), these are employer non-elective contributions.  They are generally also known as profit-sharing contributions. 

In 2025, the maximum contribution limit on combined employee and employer contributions is $70,000, up from $69,000 in 2024.

Read more: What is 401(k) matching and how does it work?

Catch up contributions for individuals aged 50 and over

Individuals aged 50 and older are allowed to put more money into a 401(k) every year to help them make up for earlier years when they couldn't spare as much. In 2025, the catch-up contribution limit remains at $7,500.

You can apply the catch-up contribution limit from the start of the year till the end of the year if you are 50 or older during the year. Let’s say you happened to turn 50 on December 31, 2025. You can still take advantage of the catch-up contribution for the entire year.

Catch up contributions for individuals aged 60 to 63

From 2025, the IRS will permit people aged 60 to 63 to contribute an additional $3,750 to their 401(k) plans - on top of the regular maximum contribution of $23,500 and the regular $7,500 catch-up for those 50 and older.²

Highly compensated employee 401(k) contribution limits

Highly compensated employees face different limits than non-highly compensated employees.

Who is a highly compensated employee (HCE) and how does being one affect your 401(k) contribution limits? It’s important to know the IRS rules for 401(k) contribution limits. If you own more than 5% of the interest in a business or receive compensation above a certain amount (more than $155,000 in 2024 or $160,000 in 2025), determined by the IRS), you’re considered a highly compensated employee for 401(k) retirement plan purposes.^3,4

You will have to follow more stringent contribution limits. You can take a look at the IRS tests that impact HCE contribution limits.⁵

Differences between Roth 401(k) contribution limits

Some employers offer both a traditional pre-tax 401(k) and a Roth 401(k) option, but what’s the difference between each? Let’s walk through the differences between both account types so you can decide which type works best for you.

• Roth 401(k): A Roth 401(k) is a contribution option within an employer-sponsored savings plan that enables you to invest after-tax dollars for retirement. You pay income taxes on your contributions but don’t pay taxes when the amounts are distributed from the plan provided that you take withdrawals after you reach age 59½ and the account has been funded for at least five years. All your accumulated contributions and any earnings may be withdrawn tax free.
• Traditional pre-tax 401(k): A traditional pre-tax 401(k) is a contribution option within an employer-sponsored plan that gives you the option to defer paying income tax on the amount you contribute for retirement. For example, let’s say you earn $50,000 and max out your retirement plan at $23,000. Assuming you have no other deductions, your taxable earnings will reduce from $50,000 to $27,000. ($50,000 – $23,000 = $27,000).
• Wondering whether you should contribute to both? You might want to take a tax-diversified approach because it could allow you to diversify your retirement savings. You can contribute to both a Roth and a traditional pre-tax 401(k) plan if your total contribution (as an employee) doesn’t go over $23,000 in 2024 and $25,500 in 2025.
• In addition to Roth and traditional pre-tax 401(k) plans, some employers also offer an “after-tax” contribution option, allowing you to save up to the total annual limit of $69,000 in 2024 and $70,000 in 2025. This means you can put away after-tax money and any investment growth is tax-deferred in your 401(k) account until withdrawal, at which point taxes would be due.

The bottom line

It’s important to pay attention to 401(k) contribution limits so you don’t go over the limit or contribute too little to meet your goals.

Wonder how your 401(k) balance compares to others who are close to your age? Check out where you fit in with your peers: Empower’s average 401(k) balance by age.

Financial professionals suggest contributing 10% of your salary to your retirement savings plan. It’s also a good idea to at least contribute enough to your 401(k) that you receive the full match from your employer. Contributing even more beyond your employer’s match may give you a better chance of meeting your savings goals.

Read more: What is 401(k) matching and how does it work?

Remember, preparing for retirement should be part of your overall financial plan. You can use Empower's free and secure professional-grade online financial tools to see all your accounts in one place, analyze your spending, and plan for long-term financial goals.