2025 Contribution Limits Announced – 401k & Flexible Spending

The IRS has announced the contribution limits for 401(k) plans and Flexible Spending Accounts (FSAs) for 2025, reflecting adjustments for inflation and legislative changes.

401(k) Contribution Limits

Employee Contribution Limit: In 2025, individuals can contribute up to $23,500 to their 401(k) plans, an increase from $23,000 in 2024. 

Catch-Up Contributions:

• Ages 50 and Over: Participants aged 50 and above can make an additional catch-up contribution of $7,500, bringing their total potential contribution to $31,000. 

• Ages 60 to 63: Starting in 2025, individuals aged 60 to 63 can make a higher catch-up contribution of $11,250, allowing for a total contribution of up to $34,750. 

Flexible Spending Account (FSA) Limits

• Health FSA Contribution Limit: The maximum contribution to a health FSA for 2025 is $3,300, up from $3,200 in 2024. 

• Carryover Provision: If an employer's plan permits, employees can carry over up to $660 of unused FSA funds into the next plan year, an increase from the previous $610 limit.

These increased limits provide an opportunity for employees to continue to enhance retirement savings and manage healthcare expenses effectively. It is essential for employers to review their specific plan provisions, as contribution caps and carryover options may vary.