Major 401(k) Changes in 2025

tysllpTax Accounting

401k changes in 2025

Maximize Your Retirement Savings

Investing in a 401(k) is one of the smartest ways to build wealth for retirement. With automatic paycheck deductions, tax benefits, and potential employer matches, it’s a no-brainer for those looking to secure their financial future. 401k Changes In 2025, the IRS is introducing key changes that could impact your contributions and tax savings. Here’s what you need to know.

1. Higher Contribution Limits for 2025

If you’re maxing out your 401(k) or planning to, there’s good news. The maximum individual contribution limit has increased to $23,500 in 2025. While only around 14% of participants currently contribute the max, those who do will benefit from additional tax savings and increased retirement funds.

2. Boosted Catch-Up Contributions for Older Workers

Catch-up contributions allow individuals 50 and older to contribute beyond the standard limit. In 2025, the traditional $7,500 catch-up contribution remains, but a new supercharged contribution has been introduced for workers aged 60 to 63.

  • Older employees in this bracket can now contribute an extra $11,250, raising their total potential contribution to $34,750.
  • This increase comes as part of SECURE Act 2.0, aimed at helping late-career workers strengthen their retirement savings.

While not everyone will max out these limits, those who can should take full advantage of these benefits.

3. Increased Income Limits for the Saver’s Credit

The Saver’s Credit is a valuable tax incentive designed to help low- to moderate-income workers save for retirement. In 2025, the income limits for eligibility are increasing:

  • Married filing jointly: $79,000 (up from $76,500)
  • Head of household: $59,250 (up from $57,375)
  • Single filers: $39,500 (up from $38,250)

This means more individuals will qualify for tax credits, reducing their tax bills dollar for dollar. The maximum credit remains $1,000 for singles and $2,000 for couples, making it a powerful tool for retirement savers.

The Hidden 401(k) Secret Most Investors Overlook

Did you know that employer matches don’t count toward your contribution limit? That means if your employer offers a generous match, your total 401(k) contributions can significantly exceed the individual max. This is free money that grows tax-deferred—yet many employees fail to take full advantage of it. Make sure you contribute enough to get the full match; otherwise, you’re leaving money on the table.

Take Advantage of These Changes Now

With higher contribution limits, supercharged catch-up options, and expanded tax credits, 2025 presents a golden opportunity to enhance your retirement savings. If possible, aim to increase your contributions and leverage the tax advantages to secure long-term financial stability.

Don’t wait—start planning now to make the most of these new rules and grow your wealth for a comfortable retirement!

TYS would be happy to have a conversation with you on how best to handle your taxes and accounting needs., just contact us here.

For more information on 401 (k) plans https://www.irs.gov/retirement-plans/401k-plans