Saving Basics
Contribution Limits: How Much Can You Actually Save?
Learn the annual contribution limits for 401(k)s, IRAs, and Roth IRAs — and strategies to make the most of them.
Contribution Limits: How Much Can You Actually Save?
Retirement accounts come with caps on how much you can put in each year. These limits exist because the government is giving you a tax break — and there's a ceiling on how generous that break can be. Knowing the limits helps you plan exactly how much to contribute, and in what order.
Why Limits Exist
The IRS sets annual contribution limits for tax-advantaged retirement accounts. These limits are adjusted periodically for inflation. Contributing more than the limit in a given year triggers penalties, so it's important to track where you stand — especially if you have multiple accounts.
💡 Insight
The limits apply per person, per account type — not per employer or per brokerage. If you have two jobs, both offering 401(k)s, the combined limit across both plans is still $23,500 (2025).
2025 Contribution Limits at a Glance
| Account | Under 50 | Age 50+ (Catch-Up) |
|---|---|---|
| 401(k) / 403(b) / 457 | $23,500 | $31,000 |
| Traditional IRA | $7,000 | $8,000 |
| Roth IRA | $7,000 | $8,000 |
| SEP-IRA | Up to $70,000 | Same |
| SIMPLE IRA | $16,500 | $20,000 |
The IRA limit of $7,000 is combined across Traditional and Roth — you can't put $7,000 in each. You could split it ($3,500 each), but the total can't exceed $7,000.
Catch-Up Contributions: Extra Room After 50
Once you turn 50, the IRS allows you to contribute more — called a catch-up contribution. This is designed to help people who started saving late or had lower-earning years earlier in their career.
- 401(k) catch-up: an extra $7,500/year (total $31,000)
- IRA catch-up: an extra $1,000/year (total $8,000)
Starting in 2025, there's also a new super catch-up for workers aged 60–63: 401(k) participants in that age window can contribute up to $34,750 — a higher ceiling than the standard age-50+ catch-up.
✏️ Tip
If you're under 50 and feel behind on retirement savings, the catch-up provision is one reason not to panic. The IRS explicitly gives you more room to accelerate in your 50s.
What Counts Toward the Limit?
For 401(k) plans, the $23,500 employee limit applies to your contributions. Your employer's match does not count against your limit — it's on top.
However, there is a combined limit (employee + employer + profit sharing): the lesser of $70,000 or 100% of your compensation (2025). For most employees, the employer match will never push them close to this ceiling.
Example: Maya contributes $23,500 to her 401(k). Her employer adds a $5,000 match. Total in the account: $28,500 — still well under the $70,000 combined cap.
Roth IRA Income Limits
Roth IRA contributions are also capped by income. If you earn above a certain threshold, your allowed contribution phases down to zero:
| Filing Status | Phase-Out Starts | Cannot Contribute Above |
|---|---|---|
| Single | $146,000 | $161,000 |
| Married Filing Jointly | $230,000 | $240,000 |
| Married Filing Separately | $0 | $10,000 |
Traditional IRA contributions have no income ceiling, but the deductibility of those contributions phases out if you (or your spouse) are covered by a workplace retirement plan.
A Practical Strategy: Use the Limits as a Target
Most people don't max out their retirement accounts — and that's okay. But the limits are a useful benchmark. A simple approach:
- Capture the full employer match first (Article 8)
- Max your Roth IRA — $7,000/year is $583/month
- Increase your 401(k) contributions toward $23,500 as your income grows
- Use a taxable account for savings beyond those limits
Even contributing half the IRA limit ($291/month) consistently into a low-cost broad index fund is a powerful long-term habit.
💡 Insight
You don't need to max every account immediately. Start by capturing the match, then work toward the IRA limit, then gradually push the 401(k) higher as raises and income growth allow.
The Deadline: It's Not December 31
One detail that trips people up: IRA contributions can be made until Tax Day of the following year.
- 2025 IRA contributions can be made until April 15, 2026
- 401(k) contributions must be made within the calendar year — they come from payroll, so there's no retroactive option
This means if you realized in March that you under-contributed to your IRA last year, you may still have time to fix it.
Key Takeaways
- The 2025 401(k) limit is $23,500 ($31,000 if 50+); the IRA limit is $7,000 ($8,000 if 50+)
- The IRA limit is shared between Traditional and Roth — you can't double it
- Employer match contributions do not count against your employee limit
- Roth IRA eligibility phases out above $146,000 (single) / $230,000 (married)
- IRA contributions can be made until Tax Day of the following year
- Don't feel pressure to max everything at once — start with the match, then the IRA
Next up — Article 10: 401(k) When You Change Jobs. You know the limits. Now let's talk about what happens to your retirement savings when you leave an employer — and how to avoid costly mistakes.
Quick Check
In 2025, what is the combined contribution limit across a Traditional IRA and a Roth IRA for someone under age 50?