You can put even more of your pre-tax dollars toward saving for retirement in 2025.

The Internal Revenue Service announced the new 401(k) contribution limits for 2025 on Friday. Individuals can contribute up to $23,500 to employer-sponsored retirement accounts including 401(k)s, 403(b)s, most 457 plans and federal Thrift Savings Plans. That's a $500 increase from last year's limit.

Those who are at least 50 years old can invest an additional $7,500 in catch-up contributions, the same amount as last year, for a maximum total of $31,000 in 2025.

For the first time, savers who are between ages 60 and 63 can contribute even more to retirement due to a provision of 2022's Secure 2.0 Act. People in that age range can contribute an additional $11,250 in 2025 to hit a maximum contribution of $34,750.

If you don't have access to a 401(k) or want an additional retirement account, savers can contribute up to $7,000 to an individual retirement account in 2025, plus an additional $1,000 for those ages 50 and older, the same limits as in 2024. The limits apply to both traditional and Roth IRAs.

Depending on your income, and whether you or your spouse are able to contribute to an employer-sponsored account, some or all of your traditional IRA contributions may be tax-deductible.

Don't leave money on table

Maxing out your 401(k) is a great way to save for retirement, but it's not the right move for everyone. Here are some tips for making the most of your individual situation.

1. Start early

Even if you aren't in a position to max out your contributions, it's important to start saving what you can as early as possible. That's because more time in the market allows your investments longer to grow and take advantage of compound interest. You might be able to put away more money in the future, but you can't get more time.

If you're able to contribute the maximum of $23,500 a year to your 401(k) and earn an 8% annual rate of return, your balance would grow to over $6 million in 40 years.

However, even contributing less will still pay off. If you put in $10,000 a year for 40 years, you'll have around $2.6 million in retirement, assuming an 8% rate of return.

2. Take advantage of an employer match

Many experts call employer 401(k) matching contributions "free money," because you don't have to put in any extra work to earn them.

Say your employer offers a 100% match on up to 4% of your salary. If you put 4% of your paycheck into your 401(k) and your company matches the contribution, you've already earned a 100% return on your investment.

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