Mercer Projects 2025 Retirement Plan Limits
The following article first appeared in the Insights section of Mercer’s website. It is reposted here with permission.
Mercer projects that nearly every key Internal Revenue Code limit for qualified retirement plans will rise from 2024 to 2025. Only the catch-up limit for employees not ages 60-63 will remain the same.
The 2025 limits will reflect increases in the Consumer Price Index for All Urban Consumers from the third quarter of 2023 to the third quarter of 2024.
This updated article reflects the final CPI-U value for September.
IRS usually announces official limits for the coming year in late October or early November.
The table below shows Mercer’s projections of the 2025 limits compared with the actual 2024 amounts.
The table also includes the new, higher catch-up contribution limits applicable to participants ages 60‒63 as implemented by the SECURE 2.0 Act of 2022 (Div. T of Pub. L. No. 117-328).
These limits first take effect for 2025 tax years.
Projected 2025 Retirement Plan Limits
| IRC retirement plan limit | Projected 2025 | 2024 |
|---|---|---|
| 401(k), 403(b) and eligible 457 plan elective deferrals (and designated Roth contributions) | $23,500 | 23,000 |
| 414(v)(2)(B)(i) catch-up contributions (plans other than SIMPLE plans) | ||
| For employees ages 60‒63 | 11,250 | 7,500 |
| For all other employees | 7,500 | 7,500 |
| 415(b) defined benefit plan annuity | 280,000 | 275,000 |
| 415(c) defined contribution plan annual addition | 70,000 | 69,000 |
| 401(a)(17) and 408(k)(3)(C) compensation | 350,000 | 345,000 |
| 414(q)(1)(B) highly compensated employee (HCE) and 414(q)(1)(C) top-paid group* | 160,000 | 155,000 |
| 416(i)(1)(A)(i) officer compensation for top-heavy plan key employee | 230,000 | 220,000 |
*The HCE limit shown for a year is applied to compensation for that plan year to determine if an employee is an HCE for the following plan year, e.g., an employee with 2025 plan year compensation greater than $160,000 may be an HCE for the 2026 plan year.
About the authors: Margaret Berger is a partner in Mercer’s Law & Policy Group. James Chakan is a principal with Mercer Wealth.
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