Year-End Retirement Plan Check: Are Your 2025 Limits Up to Date?
As 2025 comes to a close, now is the perfect time for employers and plan sponsors to ensure their retirement plans are fully aligned with this year’s IRS limits. Each year, the IRS announces cost-of-living adjustments that affect contribution limits, compensation caps, and benefit thresholds. Making sure your plan has implemented these updates correctly helps maintain compliance and ensures participants can maximize their retirement savings opportunities.
Key 2025 Limits to Confirm
If you haven’t already reviewed your plan settings for 2025, here’s a recap of the current IRS limits to verify before year-end:
- Elective Deferral Limit (401(k), 403(b), 457 Plans): $23,500
- Catch-Up Contributions (Age 50+): $7,500 standard; up to $11,250 for participants ages 60–63 under SECURE 2.0
- Defined Contribution Annual Additions Limit: $70,000
- Compensation Limit for Plan Purposes: $350,000
- Highly Compensated Employee (HCE) Threshold: $160,000
- Key Employee Limit (Top-Heavy Plans): $230,000
- Defined Benefit Plan Limit: $280,000
- SIMPLE Plan Limit: $16,500, with a $3,500 standard catch-up (or $5,250 for ages 60–63 under SECURE 2.0)
- IRA Contribution Limit: $7,000, plus $1,000 catch-up for individuals age 50 and older
Year-End Action Steps for Plan Sponsors
Before 2025 wraps up, plan sponsors should take the following steps to ensure their plans are compliant and ready for the new year:
- Review Plan Documents: Confirm that your plan reflects the correct 2025 IRS limits and determine whether an amendment is needed.
- Confirm Payroll and Recordkeeper Updates: Double-check that your payroll provider and recordkeeper applied the updated limits accurately throughout the year.
- Communicate with Participants: Remind employees about current limits and encourage them to review their contribution levels before year-end.
- Prepare for 2026: The IRS has released the 2026 limits—take time to review the updates and consider how these changes may affect your plan in the year ahead.
Final Thoughts
Year-end is an ideal time to make sure your retirement plan remains compliant and optimized for participants. A quick review now can help you start 2026 on solid footing.
At Brady Martz, our Employee Benefits team helps employers interpret IRS updates, verify plan compliance, and prepare for new annual limits. Contact us today to ensure your plan is ready for the transition into 2026.
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