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401(k) Guide for 2025
A 401(k) is an employer-sponsored retirement account offering tax-advantaged growth and often an employer match — typically the best starting point for retirement savings given the free-money match potential.
2025 Contribution Limits
| Limit Type | 2025 Amount |
|---|---|
| Employee contribution | $23,500 |
| Catch-up (age 50+) | Additional $7,500 |
| Combined employee + employer | $70,000 |
Traditional vs. Roth 401(k)
Many employers now offer both a traditional 401(k) (pre-tax contributions, taxed withdrawals) and a Roth 401(k) (after-tax contributions, tax-free withdrawals) — choose based on whether you expect your tax rate to be higher now or in retirement.
Always Capture the Full Employer Match
If your employer matches contributions, contribute at least enough to receive the full match before prioritizing other savings — this is an immediate, guaranteed return on your contribution.
Common Mistakes
Not contributing enough to receive the full employer match, effectively leaving free money unclaimed — this is one of the most common and costly retirement savings mistakes.
Frequently Asked Questions
$23,500 for employees under 50, with an additional $7,500 catch-up contribution allowed for those 50 and older.
Choose traditional if you expect a lower tax rate in retirement than now; choose Roth if you expect a similar or higher tax rate later. Many people split contributions between both for tax diversification.