Year-end 401(k) planning has gotten complicated with all the new rules and limits flying around. As someone who almost missed maxing out my own contributions last December because I waited too long to adjust my payroll, I learned everything there is to know about these deadlines. Today, I will share it all with you so you don’t make the same mistake I did.
Here’s the thing — unlike IRA contributions that you can make all the way up to tax filing day in April, 401(k) contributions have to go through payroll deduction by December 31st. Period. No extensions, no grace periods, no exceptions.
2025 401(k) Contribution Limits
The IRS has bumped up the limits for 2025, and there’s actually a brand-new category this year that not enough people are talking about:
Standard Employee Contribution Limit: $23,500 (up from $23,000 in 2024 — a nice little bump)
Catch-Up Contribution (Age 50+): An additional $7,500 on top, bringing your total to $31,000
New Super Catch-Up (Ages 60-63): This is the big one. Starting in 2025, if you’re between 60 and 63, you can contribute an extra $11,250 in catch-up contributions. That’s a total of $34,750. I nearly fell off my chair when I first read about this provision in SECURE 2.0.
Total Contribution Limit (Employee + Employer Combined): $70,000 for 2025
Understanding the December 31 Deadline
Probably should have led with this section, honestly. The 401(k) contribution deadline is absolute and immovable. No wiggle room.
Payroll Timing: Your contribution has to be deducted from your paycheck and deposited into your 401(k) account by December 31. So if your last paycheck of the year hits on December 27, that’s really your deadline in practice. Don’t be the person who realizes this on December 28.
Processing Time: Call your HR department now. Not tomorrow, not next week — now. Most companies require contribution changes to be submitted 1-2 pay periods in advance. I’ve seen people miss out on thousands because they assumed changes would take effect immediately.
No Extensions: Unlike IRAs, there is zero ability to make 401(k) contributions after the year ends. If you didn’t hit the limit through payroll, that opportunity is gone. It doesn’t roll over, and you can’t make it up.
Catch-Up Contribution Rules
If you turn 50 or older at any point during the calendar year, you qualify for catch-up contributions for the entire year. The extra $7,500 might not sound life-changing, but compound that over 10 or 15 years and it’s a meaningful chunk of retirement security.
Here’s a quick tax angle: for someone in the 24% bracket, maxing out catch-up contributions saves an extra $1,800 in federal taxes this year. That’s real money in your pocket while you’re simultaneously building wealth for later.
The new SECURE 2.0 provisions add an interesting twist to the catch-up structure:
- Ages 50-59: Standard $7,500 catch-up
- Ages 60-63: Enhanced $11,250 catch-up (the sweet spot)
- Age 64+: Drops back to the standard $7,500
That 60-63 window is a golden opportunity. If you’re in that range, don’t let it pass without taking advantage.
Strategies for Maximizing Year-End Contributions
If you’ve fallen behind on contributions this year, don’t panic. Here’s how I’d approach it:
Calculate Your Gap: Pull up your year-to-date 401(k) contributions — it’s usually right on your pay stub or your plan’s website. Figure out how much room you’ve got left before hitting the limit.
Crank Up Your Contribution Percentage: If you’re paid semi-monthly and have two paychecks left, you might need to temporarily jack your contribution rate way up. I’ve seen people go to 80% or even 90% for a single paycheck to catch up. Yes, it stings in the moment, but you’ll thank yourself later.
Use Your Bonus: A lot of employers let you direct year-end bonuses straight into your 401(k). If you’ve got a bonus coming, this is one of the easiest ways to close the gap without feeling the pinch on your regular paycheck.
Be Realistic About Cash Flow: If bumping contributions is going to mean missing rent, pump the brakes. At minimum, make sure you’re getting your full employer match. That’s the guaranteed return you don’t want to leave behind.
Employer Matching Considerations
That’s what makes employer matching endearing to us retirement savers — it’s genuinely free money, and yet a shocking number of people don’t grab all of it.
Before you obsess over maxing out contributions, make sure you’re capturing every dollar of your employer match first:
Match Formulas: The most common setups are 50% match on the first 6% of salary, or dollar-for-dollar on the first 3%. But every plan is different, so dig into your specific plan documents.
True-Up Provisions: This is a big one. Some plans do a year-end “true-up” match, which means if you front-loaded your contributions and maxed out early in the year, you’ll still get your full match. Not every plan does this, though. Ask HR — it could be the difference between getting your full match or leaving money on the table.
Vesting Schedules: Keep in mind that your employer’s contributions may vest over time, typically 3-6 years for full vesting. Your own contributions are always 100% yours immediately.
Common Mistakes to Avoid
I’ve watched people make each of these mistakes, and a couple of them I’ve made myself. Don’t repeat them:
- Waiting Too Long: Procrastinating until December gives you zero runway if payroll systems need time to process your changes. Start early.
- Forgetting About Catch-Up: So many people who turned 50 this year have no idea they can contribute an extra $7,500. If that’s you, you’re welcome.
- Missing the Match Through Front-Loading: If you max out your contributions by October and your plan doesn’t have a true-up provision, you might miss out on November and December employer matching. Spread contributions evenly unless you know your plan does a true-up.
- Not Checking Your Pay Stubs: Payroll errors happen. Verify that your contribution changes actually went through and the right amounts are being deducted.
- Overlooking the Roth Option: Many plans now offer a Roth 401(k). If you expect to be in a higher tax bracket in retirement, or if you want tax diversification, it’s worth considering. I wish someone had told me about this earlier in my career.
What If You Can’t Max Out Your 401(k)?
Look, not everyone can swing $23,500 a year. Life is expensive. If maxing out isn’t in the cards right now, here’s how I’d prioritize:
First Priority: Contribute at least enough to grab your full employer match. This is effectively free money with an instant 50-100% return. There’s no investment on earth that beats that risk-free.
Second Priority: If you’re carrying high-interest debt — especially credit cards — balance your debt payoff with retirement contributions. Getting rid of 22% interest debt is a guaranteed return too.
Third Priority: If you’ve got additional savings capacity beyond the match, consider contributing to a Roth IRA ($7,000 limit for 2025). It’s a nice complement even if you can’t max out the 401(k).
Plan for Next Year: Set up automatic annual increases now. Most plans let you schedule a 1-2% bump each year. You barely notice it when it happens gradually, and before you know it you’re at the max. Seriously, go do this today.
The bottom line? Take action now. Log into your 401(k) provider’s website or call your HR department today. Don’t be the person who looks at their December 31 paycheck and wishes they’d acted sooner. That deadline doesn’t care about good intentions.
