Saving and investing as much as possible during working years gives people more options in the future, so what better time than now to remind employees about the IRS changes to retirement accounts. Effective January 1, 2025:
- Workers age 49 and younger are permitted to contribute up to $23,500 into their 401(k), 403(b) or Thrift Savings Plan, and most 457 plans. This reflects a $500 increase from 2024.
- Employees age 50 and older can contribute up to $31,000. This is also $500 higher than in 2024.
- Workers ages 60-63 can make “super catch-up” contributions of up to $11,250 for a total of $34,750. This super catch-up is indexed to inflation and may increase year to year.
Letting employees know of these changes early in the year may help them maximize their retirement savings. For example, workers may wish to increase their deferrals spread over each paycheck, or choose to contribute their bonuses, commissions, and/or salary increases in a lump sum as those wages come due to have less impact on their regular take-home pay. Employees should also be advised to consult their tax and/or financial planning professionals for more information.
