As we enter 2025, I wanted to share some important updates about 401(k) contributions for business owners to help with your retirement planning.
Key 2025 401(k) Contribution Limits for Employees:
- Under Age 50:
- Contribution limit: $23,500 (up $500 from 2024).
- Age 50 & Over:
- Additional catch-up contribution: $7,500.
- Total possible contribution: $31,000.
- Special Catch-Up for Ages 60–63:
- Catch-up contribution: $11,250.
- Total possible contribution: $34,750.
Employer Contributions
You can also contribute up to 25% of your compensation (after Social Security and Medicare taxes) as the employer portion. This calculation can vary depending on the way you file and contributions to other retirement accounts. For more details, check out this link: Contribution Info, or speak to your trusted CPA.
Maximum 401(k) Aggregate Contributions for 2025:
- Under Age 50: Up to $70,000.
- Ages 50–59: Up to $77,500.
- Ages 60–63: Up to $81,250.