For 2025, there’s some great news: contribution limits are increasing once again. Here’s what you need to know about the new limits, how they can help you save more, and what this means for businesses sponsoring 401(k) plans. 

The New 2025 Contribution Limits 

For 2025, the IRS has increased the annual 401(k) contribution limit to $23,500, an increase of $500 from 2024. This applies to employees who participate in traditional 401(k), 403(b), most 457 plans, or the federal government’s Thrift Savings Plan. 

Workers aged 50 and older are still allowed to make additional “catch-up” contributions. This catch-up limit remains at $7,500 for most plans in 2025, allowing those nearing retirement to contribute up to $31,000 annually for most 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan. A new feature in 2025, SECURE Act 2.0 added additional catch-up contributions for employees aged 60-63, in the amount of $11,250.

Beyond employee deferrals, the combined limit for all contributions (employer match + employee contribution) is now set at $70,000, an increase from $66,000 in 2024. For employees aged 50 and over, this combined limit goes up even further to $77,500 if you include catch-up contributions. 

How to Maximize Your Savings 

If your employer offers a match, make sure you’re contributing enough to take full advantage of it. For example, if your company matches 50% up to 6% of your salary and you’re earning $100K, setting aside 6% ($6,000) means you’ll receive an additional $3,000 in matching contributions. That’s $3,000 added to your account each year. Employees who don’t contribute to their full match are leaving money on the table. 

While it would be ideal, we know that contributing the maximum amount immediately isn’t feasible for everyone. If you can’t max out your 401(k), try increasing your contributions incrementally. For example, increase your contribution rate by 1% of your salary each year or after every raise.

If you’re 50 or older, use the catch-up contribution option to supercharge your retirement savings. The additional $7,500 can make a substantial difference, particularly if you got a late start on saving. 

Remember to automate your contributions so you can save consistently without thinking. This is an easy way to ensure you’re steadily working toward your retirement goals. 

How These Changes Impact Businesses 

For businesses sponsoring 401(k) plans, the new limits bring both opportunities and challenges. 

First, if your business offers a matching program, higher employee contributions could increase costs. However, offering a competitive 401(k) match is a powerful tool for attracting and retaining top talent, especially in today’s tight labor market. For smaller businesses, even modest matching programs can make a big difference in employee satisfaction and loyalty. 

Businesses need to pay close attention to the IRS rules for highly compensated employees (HCEs), which include individuals earning more than $160,000 in 2024 or owning more than 5% of the company. Ensuring your 401(k) plan remains compliant and nondiscriminatory is crucial. Consider adopting a Safe Harbor 401(k) plan, such as those offered by 401GO, which simplify compliance and eliminate certain nondiscrimination testing in exchange for agreed-upon matching or contribution requirements. 

For small to mid-size businesses, budgeting for increased contributions is essential. Changes like employee raises, new hires, or higher participation rates could lead to higher matching costs. However, these higher matching costs could result in more tax deductions for your company. Proactively planning for these potential expenses will help your business stay financially prepared while maintaining a valuable benefit for your team.

Build a Stronger Future for Your Workforce 

The increase in 401(k) contribution limits for 2025 is an opportunity for employees to save more and for businesses to demonstrate their commitment to employee well-being. 

Offering a robust retirement plan helps businesses compete for top talent, boost morale, and foster long-term loyalty. If you’re looking for an easy and cost-effective way to implement or upgrade your 401(k) program, 401GO is here to help. 

With 401GO, you can easily set up a compliant, affordable 401(k) plan tailored to your business needs. Our technology streamlines plan management so that you can focus on growing your business while supporting your employees in building a secure retirement. Get started with 401GO today! 

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With nearly 1 in 4 employees leaving jobs for better benefits and 90% comparing benefit plans before making a career move, offering competitive retirement options is critical for attracting and retaining talent. This partnership provides isolved customers—ranging from sole proprietors to established businesses—with flexible, automated 401(k) solutions that reduce complexity and ensure compliance.

“At isolved, we strive to provide solutions that help businesses offer competitive benefits while reducing administrative complexity,” said Barry Gauch, VP of Strategic Alliances and Partnerships at isolved. “Partnering with 401GO enhances our 401(k) offerings, giving our customers an easy-to-manage, scalable retirement solution that supports employee financial wellness.”

With isolved 401(k), powered by 401GO, businesses can choose from three tailored 401(k) plans:

• isolved 401(k) Enterprise – A fully customizable plan for growing or mature businesses, featuring profit-sharing, dedicated investment support, and automated compliance tools.
• isolved 401(k) Small Business – A cost-effective, deferral-only 401(k) solution for businesses looking to comply with state mandates or offer an entry-level retirement benefit.
• isolved 401(k) Solo – Designed for sole proprietors, contractors, and single-member LLCs seeking a retirement plan with higher contribution limits and minimal administrative burden.

“401GO’s mission is to make retirement planning accessible and frictionless for businesses of all sizes,” said Dan Beck, co-founder and CEO of 401GO. “Partnering with isolved scales that mission, bringing our intuitive, automated 401(k) solutions to thousands of employers and employees through isolved People Cloud.”

The integration of 401GO’s cutting-edge technology within isolved People Cloud ensures a seamless 401(k) experience—from automated plan setup and payroll integration to built-in compliance and investment flexibility. Additionally, businesses leveraging this partnership can maintain their existing financial advisor relationships, making it a uniquely flexible and scalable solution.

About 401GO

401GO is a leading fintech innovator specializing in retirement planning solutions optimized for small and medium sized businesses. With a mission to make retirement planning accessible, practical and frictionless, 401GO offers innovative tools and services designed to help individuals secure their financial futures. Visit 401go.com to learn more.

About isolved®

isolved is the most trusted HCM technology leader, providing the best combination of software and services to meet the needs of today’s People Heroes – HR, payroll, and benefits professionals. From talent acquisition to workforce management to talent management, our solutions are delivered directly or through our HRO partner network to more than 7.7 million employees and 189,000 employers across all 50 states – who use them every day to increase productivity, accelerate decision-making and ensure performance, while reducing risk. isolved People Cloud, our intelligently connected platform, automates the entire employee experience by design, so that organizations can engage, empower, and energize their talent while freeing their People Heroes to exceed their goals and grow their careers. Visit https://www.isolvedhcm.com/ to learn more.

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What are rollovers?

A rollover is a process to move your retirement funds from one plan (employer) to another. This is typically done in one of two ways.

The most common are direct 401(k) rollovers. This is when retirement funds are transferred directly from one institution to another. The account owner doesn’t handle the funds themselves during the process, which helps them avoid potential taxes or penalties.

In contrast, a 60-day rollover pays the distribution directly to the participant. The participant is then required to deposit the funds into a new retirement account within 60 days of receiving the distribution, otherwise the funds will be treated as taxable income. 

Why you should rollover your account

It’s important to understand the advantages of rolling over retirement funds.

• Centralized Management: Rather than having money in several different places, keep all your money in one spot, making it simple to manage and track your finances. 
• Cost Savings: When you leave a job, the recordkeeper of the former employer’s retirement plan may charge fees to maintain the account. Rolling over your savings can help you avoid these unnecessary charges.
• Ease of Process: Managing a single account reduces the unnecessary complexity of managing and monitoring investments in multiple accounts.
• Tax Benefits: Depending on the type of retirement account, you may be able to maintain tax-deferred status, ensuring you don’t incur unnecessary tax penalties. 

How to rollover your plan

The process can get complicated, but 401GO makes it easy. All participants have to do is go into the 401GO account and click on the “Rollover Funds” tab under “Account.” From there, just answer a few simple questions. We will provide them with a letter to send to the previous retirement account provider. Submit the letter and we will handle the rest. 

Prepare for your future even as your present situation changes by taking advantage of rollovers. As always, if you have any questions or concerns, 401GO is eager to help.

The post 401(k) Rollovers: Take Your Retirement With You appeared first on Fast and Affordable 401k for growing businesses.

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These provisions are applicable to any client whose principal residence was in a federally declared disaster area or who sustained an economic loss by reason of a federally declared disaster. Examples of economic loss could include damage to personal property from fire, flooding, wind, or other causes; loss related to an individual’s displacement from home; and loss of livelihood due to temporary or permanent layoffs.  

How Disaster Withdrawals Work

A client can take $22,000 from all eligible retirement plans (401(k) plan, money purchase pension plan, section 403(b) plan, and governmental section 457(b) plan). A qualified disaster withdrawal from an eligible retirement plan must be before the date that is 180 days after the latest of

1. Dec. 29, 2022
2. First day of the incident period with respect to the qualified disaster
3. Date of the disaster declaration with respect to the qualified disaster

Your client may repay all or part of the amount of a qualified disaster recovery distribution to an eligible retirement plan if the qualified individual completes the repayment within the 3-year period beginning on the day after the date the distribution was received. If the distribution is repaid, it will be treated as though it were repaid in a direct trustee-to-trustee transfer so that your client doesn’t owe federal income tax on distribution. The 10% additional tax does not apply to any qualified disaster recovery distribution made to your client if repaid.

It is optional for employers to adopt the expanded distribution and loan rules. However, even if an employer doesn’t treat a distribution as a qualified disaster recovery distribution, your client may still do so through this form. However, it is important to note that your client’s employer must have a plan that is eligible for qualified disaster distributions. 

How Disaster Withdrawals Affect Taxes

Financial advisors should remind clients that any qualified disaster recovery distribution they receive should be reported on their federal income tax returns over the 3-year period beginning with the year of receipt unless they elect on Form 8915-F to include the entire amount in income in the year of receipt. The payment of a qualified disaster recovery distribution to your client must be reported as well on Form 1099-R.

To find out if your client was affected by a federally declared disaster and can use qualified disaster withdrawals, consult this list. Even in hard times, there are resources to help. 401GO will be there along the way to guide you and ensure your clients receive the care they need.

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