On November 1, 2024, the IRS announced cost-of-living adjustments to dollar limitations for pension plans and other retirement-related items for the 2025 tax year. The Internal Revenue Code mandates that the Secretary of the Treasury make these annual adjustments.
Some highlights are:
- The elective deferral (contribution) limit for employees participating in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will increase to $23,500.
- The catch-up contribution limit for individuals aged 50 and over will remain at $7,500. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in these plans. For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500.
* Due to new Secure 2.0 optional provision
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