The IRS has announced 3 key changes to 401(k)s for 2025 — here's how to take advantage of them and grow your retirement riches

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A great approach to boosting your retirement savings is enrolling in an employer-sponsored plan. Several reasons make that the case. For one, it's hassle-free since contributions are automatically taken directly from your paycheck. Moreover, the contributions are tax-deductible, and your employer may even match them, given their company policy.

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• Save you more than $600 per year.
• Here’s how to get started with a budget of $10 or less.
• You might also consider accomplishing the same goal in 2025.

Will take effect in 2025.

1. Contribution limit changes

The first significant change will impact employees who are making the full contribution to their account or are approaching the legal limit for tax-deductible contributions. It involves an increase in the permissible investment amount.

Investing a larger chunk of money can mean saving more in taxes right now and adding to your retirement savings down the line.

2. Supercharged catch-up contributions

Catch-up contributions are extra payments you can make beyond the regular limit after you turn 50. For people in this group, the 401(k) limit remains the same as it was in 2024, at $7,500.

Thanks to the SECURE Act 2.0, individuals nearing retirement age can now significantly boost their savings. The law implemented a new provision that expands catch-up contributions for workers aged 60 to 63. This includes allowing those aged 60 to 63 to make an additional $11,250 in 401(k) contributions in 2025, bringing their total to $34,750.

in 2025

Although this is a significant amount of money that is probably out of the budget for most individuals, and data from Vanguard shows that only around 15% of eligible employees took advantage of catch-up contributions if they were offered, this could still provide much-needed relief for those concerned about saving enough for their future.

The income limits for claiming the Saver's Credit are rising.

The adjusted income limits for the Saver's Credit will change again in 2025, to:

• The threshold for married couples filing jointly is increasing to $79,000, up from $76,500.
• Individuals who are considered heads-of-household can receive up to $59,250, an increase from the previous $57,375.
• $39,500, up from $38,250, for single tax filers

The Saver's Credit matches your contributions to a 401(k) or eligible retirement plan with a tax credit ranging from 10% to 50%. You can receive up to $1,000 if you file taxes solo or $2,000 if you file jointly. Because credits reduce taxes dollar for dollar, they hold considerable value, and a higher income limit increases the number of people eligible to benefit.

These changes can help boost your retirement savings by allowing higher contributions and more tax benefits. If you can, take advantage of the chance to put the maximum into your tax-advantaged 401(k) contributions to place yourself in a position to have plenty of financial security when you retire.

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This article offers information for reference purposes only and should not be taken as guidance or instruction. It is provided without any implicit or explicit guarantee of accuracy or reliability.