It’s easy to see why 401(k)s are one of the most popular retirement accounts: They offer high annual contribution limits and the possibility of an employer match. Some companies even let you choose whether you want to fund your account with pre-tax or after-tax dollars.

These accounts are set to look even better next year, with four big changes arriving Jan. 1, 2025. They may not all apply to you right now, but keep them in mind, as they may affect you in future years.

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1. Higher contribution limits

The biggest 401(k) change coming in 2025 is a $500 increase in contribution limits. Adults under 50 can currently contribute up to $23,000, while adults 50 and older may contribute up to $30,500. In 2025, these limits will rise to $23,500 and $31,000, respectively.

Note that this is just the limit on how much you can personally contribute to your account. You can receive more than this if you contribute the annual max and your employer gives you money in the form of a matching contribution. The total maximum for all 401(k) contributions during the year is $69,000 in 2024 and $70,000 in 2025. This applies to all your 401(k)s, not to each individually.

2. Increased catch-up contributions for workers aged 60 to 63

Adults 50 and older have higher contribution limits than those under 50 because they’re allowed to make a $7,500 catch-up contribution. Beginning in 2025, the government is adding a new catch-up contribution tier for those who will be between the ages of 60 and 63 by Dec. 31, 2025.

These individuals will get a catch-up contribution of $11,250, bringing their total 2025 contribution limit to $34,750. Right now, this only applies to those aged 60 to 63. Workers aged 50 to 59 or 64 and older are limited to a maximum $31,000 contribution next year.

3. Mandatory 401(k) auto-enrollment

Beginning in 2025, the federal government will mandate that employers auto-enroll qualifying employees in 401(k) plans in the hopes of boosting participation. The new law requires a minimum initial auto-enrollment percentage of at least 3% but not more than 10% of pay. It will also require mandatory escalation of 1% per year until you reach at least 10%, but not more than 15% of compensation. Employees may opt out or choose their own contribution percentage at any time.

This new rule won’t affect all plans next year, though. These groups are exempt from the mandatory auto-enrollment law:

• All current 401(k) plans (grandfathered)
• Small businesses with 10 or fewer employees
• New businesses that have been in business for less than three years
• Church plans
• Governmental plans

It’s possible this may not affect you in 2025. But it could come into play in future years, so it’s something to be mindful of.

4. Easier 401(k) access for part-time workers

Under current law, part-time workers can be eligible to participate in their employer’s 401(k) plan if they have worked for the employer for at least 500 hours in each of the last three years. But a 2025 law change will drop this requirement to just two years of service with 500 hours in each one.

It’s a small change, but it could help some part-time employees who want to participate in their employer’s 401(k) plan do so faster. However, they’ll still have to come up with some spare cash to do this, and that’s not always easy.

Keep these changes in mind, even if they don’t all affect you now. They may become important to you in future years. You should also remember that things like contribution limits usually change annually, so you may be able to set aside more in future years than you can today.

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