The IRS has released its annual inflation adjustments, and the magic number for 2025 is $23,500.
That's the maximum an employee can stash in a 401(k), 403(b), or most workplace retirement plans next year, up from $23,000 in 2024.
It sounds like small potatoes, but that extra $500 compounds.
If you're anywhere near the top of your contribution range, this is the rare piece of money news that works in your favor.
Workers 50 and older can add another $7,500 on top of the base limit, bringing their total to $31,000.
But the real headline is for the 60-to-63 group: a new "super catch-up" allows an extra $11,250 for that three-year window, pushing their ceiling to $34,750.
Lawmakers wanted to give people nearing retirement one last chance to pad their nest egg before they leave the workforce.
If you fall in that age bracket, the window is narrow, so it pays to check your plan's rules now.
Employer matching still works the same way.
Most companies match a percentage of what you put in, and that match does not count against your $23,500 limit.
It's free money, and too many people leave it on the table by contributing too little to trigger the full match.
If maxing out feels impossible, you're not alone.
The median American household brings in around $80,000 a year, and setting aside nearly a quarter of that isn't realistic for most families.
Financial planners typically suggest starting with whatever your employer matches, then nudging your rate up by one percent each time you get a raise.
That slow-build approach beats doing nothing.
A worker who contributes just 6 percent of a $60,000 salary for 30 years, with a 4 percent employer match and average market returns, can still land in six figures by retirement.
The limit is a ceiling, not a requirement.
One more thing to watch: the income thresholds for Roth and traditional IRA contributions also shifted.
Roth IRA phase-outs now start at $150,000 for single filers and $236,000 for married couples filing jointly.
If you've been locked out of Roth contributions before, your situation may have changed.
The contribution deadline for 2025 is December 31, 2025, for payroll deferrals.
Unlike IRAs, you can't wait until tax day to top off a 401(k), so if you want to hit the new limit, you'll need to adjust your paycheck withholding early in the year.
Our take: a $500 bump won't change anyone's life overnight, but it's a quiet nudge to review your retirement rate.
Final Thoughts
Spend ten minutes in your plan's portal this week, bump your contribution by a percent or two, and let the next few decades do the heavy lifting.