401(k) Contribution Limits for 2025

The 2025 contribution limit for 401(k) accounts is $23,500. For those older than 50, it is $31,000.

If you have access to an employer-sponsored 401(k) account, determining how much to put into this tax-advantaged account can be a big decision with long-lasting ramifications. These accounts are funded with pre-tax dollars from your salary, which can then be invested in a number of different ways.

Many employers will have portfolio recommendations (like target funds) or outside contacts who can advise you on how to invest according to your risk tolerance, retirement timeline, and preferences, but it's always a good idea to think for yourself and head into meetings on your account with a good idea of what you think your ideal contribution amounts are. 

Three questions to help you plan:

1. How old are you? Knowing how much time you have until you retire can make a difference in what advisors might recommend and what you should consider.
2. How much does your employer offer in matching contributions? For a variety of reasons, matches may be available at your company. As a general rule of thumb, you should invest at least as much as your employer is willing to match.
3. What is your discretionary income? Your cash flow, including salary relative to expenses, is a vital thing to consider to ensure that you can cover your day-to-day expenses as well as any emergency situations you may need a rainy-day fund for. Saving for retirement is important, but once you've invested in a 401(k), it is best to leave that fund until retirement time due to potential penalties and tax ramifications.

If you have questions, give us a call at the number below and we'd be happy to discuss your situation!