Every tax-advantaged retirement account comes with an annual cap on contributions set by the IRS. These limits are separate for different account types and are adjusted most years to keep pace with inflation. Knowing the numbers helps you prioritize accounts and avoid excess-contribution penalties.
Elective deferral limits for workplace plans
For 2025, employees can defer up to 23,500 dollars of their own pay into a 401(k), 403(b), or most 457 plans. This elective deferral limit is shared across traditional and Roth contributions within the same plan, so splitting money between them does not raise the ceiling. If you participate in plans from two employers in the same year, the limit applies to your combined personal deferrals. The IRS typically raises this figure by a few hundred dollars each year for inflation.
The higher total additions limit
Beyond your own deferrals, there is a much larger cap on the combined total of employee contributions, employer match, and any after-tax contributions. For 2025 this total additions limit is 70,000 dollars, not counting catch-up contributions. This is why an employer match does not reduce how much you can personally defer. The gap between your deferral limit and this total is what makes strategies like the mega backdoor Roth possible in some plans.
IRA limits and income phase-outs
IRAs have their own, lower cap of 7,000 dollars for 2025, or 8,000 dollars if you are 50 or older, combined across all your IRAs. Roth IRA eligibility phases out at higher incomes, and the deductibility of traditional IRA contributions phases out when you are covered by a workplace plan. Because the IRA limit is completely separate from the 401(k) limit, you can generally fund both in the same year. Contributing more than allowed triggers a 6 percent excise tax each year the excess remains.
Catch-up contributions after 50
Savers aged 50 and older can add catch-up contributions on top of the standard limits, which for 2025 means an extra 7,500 dollars in a 401(k) and an extra 1,000 dollars in an IRA. A newer provision allows an even larger 401(k) catch-up for those aged 60 through 63. Starting in 2026, higher earners must make their workplace catch-up contributions as Roth rather than pre-tax. These extra amounts are designed to help people accelerate saving as retirement approaches.
A 40-year-old maxing out in 2025 could defer 23,500 dollars to a 401(k) and add 7,000 dollars to an IRA, for 30,500 dollars in personal contributions. With an employer match, total contributions to the 401(k) could climb well beyond the personal deferral limit, up toward the 70,000 dollar total additions cap.
Key takeaways
- The 2025 employee 401(k) deferral limit is 23,500 dollars, shared across Roth and traditional.
- A separate total additions limit of 70,000 dollars covers employee plus employer contributions.
- IRA contributions are capped at 7,000 dollars for 2025, or 8,000 dollars at age 50 and up.
- Catch-up contributions add room after 50, with an even larger allowance at ages 60 to 63.
Common mistakes
- Assuming the employer match counts against your personal deferral limit.
- Contributing to two employers' 401(k) plans and exceeding the combined personal limit.
- Overfunding a Roth IRA while ineligible and owing the 6 percent excess-contribution tax.
FAQ
Do limits reset every calendar year?
Yes. Contribution limits apply per tax year, and unused room does not carry forward, so missing a year's contribution is a permanent lost opportunity.
Can I max out both a 401(k) and an IRA?
Yes. Their limits are separate, so a high earner can contribute the full amount to each, subject to Roth IRA income rules.