The Internal Revenue Service (IRS) announced on November 1, 2024 that for the tax year 2025 the annual 401(K) plan contribution limit will increase to $23,500, up from $23,000 in 2024.
The catch-up contribution limit for employees aged 50 and over in 401 (K) plans is unchanged at $7,500 which increased from $6,500 for 2023.
The catch-up contribution limit for employees aged 60 to 63 will now be $11,250 annually as a new category from the SECURE ACT 2.0.
For highly compensated employees, the threshold for determination will increase to $160,000 in 2025, up from $155,000 in 2024.
The IRS announced this and other changes in https://www.irs.gov/pub/irs-drop/n-24-80.pdf. This notice provides guidance for cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for the tax year of 2025. Section 415(d) requires the Secretary of the Treasury to annually adjust these limits for cost-of-living increases.
Any employees impacted may want to review their current and future deductions and make any adjustments if needed.