Understanding the annual IRS limits for your retirement plan is key to maximizing your financial future. For 2025, participants in 401(k) plans can contribute up to $23,500 through elective deferrals, an increase from $23,000 in 2024. Those age 50 and older can make an additional catch-up contribution of $7,500. Furthermore, starting in 2025, individuals aged 60, 61, 62, and 63 may be eligible for a higher catch-up contribution of $11,250, if their plan allows.

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For both 401(k) and profit-sharing plans, which are types of defined contribution plans, the total contribution limit (including employee and employer contributions, and any forfeitures) for 2025 has risen to $70,000 from $69,000 in 2024. The maximum amount of annual compensation that can be taken into account for these plans in 2025 is $350,000, up from $345,000 in 2024.

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For defined benefit pension plans, the maximum annual benefit that can be funded for a participant retiring in 2025 is $280,000, an increase from $275,000 in 2024. The same annual compensation limit of $350,000 for 2025 also applies when determining benefits and contributions for these plans.