US Pension Annual Allowance Calculator 2025 – 401(k), IRA & Retirement Contribution Limits

  • Adam
  • November 1, 2025

Calculate your maximum pension contribution limits for 2025. Get annual allowance for 401(k), 403(b), IRA, SIMPLE, SEP, Solo 401(k), and Defined Benefit plans with catch-up contributions.

US Pension Annual Allowance Calculator

Calculate maximum contribution limits for retirement plans in 2025

Table of Contents

What is the Annual Allowance?

The annual allowance is the maximum total amount that can be contributed to your retirement accounts in a single calendar year. This includes employee deferrals, employer contributions, matching contributions, and profit-sharing allocations. Understanding your annual allowance helps you maximize retirement savings without exceeding IRS limits and avoiding costly penalties.

Calculate Your Limits

Your Pension Annual Allowance Results

Max Employee Contribution:
Employer Contribution:
Catch-Up Contribution Available:
Total Annual Allowance:

Important Reminders

💡 Plan Limits: Each plan type has different contribution limits. Review your specific plan document for details.
📅 2025 Limits: All calculations use 2025 IRS contribution limits. Limits change annually for inflation adjustments.
🔄 Combined Limits: Your total contributions across all plans cannot exceed $70,000 or 100% of compensation (whichever is less).
👥 Employer Match: Employer contributions count toward your annual limit. Coordinate with your plan administrator.
⚠️ Excess Contributions: Contributing over the limit results in double taxation (6% annual excise tax on excess) and penalties.
⚠️ Disclaimer: This calculator provides estimates. Consult a tax professional or financial advisor for precise calculations specific to your situation.

Contribution Formulas & Methodology

401(k) Plan Calculation

Employee Deferral Limit (2025):
Maximum = $23,500 (under age 50)
Maximum = $23,500 + $7,500 catch-up = $31,000 (ages 50–59, 64+)
Maximum = $23,500 + $11,250 catch-up = $34,750 (ages 60–63)

Annual Addition Limit:
Total Annual Addition = Lesser of:
• 100% of Annual Compensation, or
• $70,000 (2025)

Formula: Employee Deferral + Employer Match + Profit Sharing ≤ $70,000 or 100% of compensation

Traditional IRA Calculation

Annual Contribution Limit (2025):
Maximum = $7,000 (under age 50)
Maximum = $7,000 + $1,000 catch-up = $8,000 (age 50+)

Constraint: Cannot exceed earned income for the tax year

Formula: IRA Contribution ≤ Lesser of ($7,000 or $8,000 if 50+) and earned income

SIMPLE IRA Calculation

Employee Deferral Limit (2025):
Maximum = $16,500 (under age 50)
Maximum = $16,500 + $3,500 catch-up = $20,000 (age 50+)

Employer Contribution (Required):
• Matching Contribution = Employee Deferral × Match % (up to 3%)
• OR Non-Elective = 2% of all eligible employee compensation

Formula: Employee Deferral + Employer Contribution ≤ $70,000 or 100% of compensation

SEP IRA Calculation

Maximum Contribution (2025):
SEP-IRA Contribution = Net Self-Employment Income × 20%*
Maximum = $70,000 (2025) or 100% of compensation

*20% represents approximately 25% employer contribution rate less self-employment tax deduction

Formula: Net SE Income × 0.20 = Maximum SEP-IRA contribution (capped at $70,000)

Solo 401(k) Calculation

Employee Deferral:
Employee Deferral = Up to $23,500 (2025)
Plus Catch-up = Up to $7,500 or $11,250 (ages 60–63)

Employer Contribution:
Employer Contribution = Net SE Income × 20%*

Total Combined:
Total = Employee Deferral + Employer Contribution ≤ $70,000 or 100% of net SE income

Formula: Employee Deferral + (Net SE Income × 20%) ≤ $70,000 or 100% compensation

Defined Benefit Plan Calculation

Maximum Annual Benefit (2025):
Maximum = Lesser of:
• 100% of highest 3-year average compensation, or
• $280,000 (2025)

Annual Funding Contribution:
Required Contribution = Actuarially determined based on:
• Promised annual benefit
• Years of service
• Investment returns
• Mortality rates

Formula: Actuarially determined annual funding ≤ Amount needed to fund maximum benefit of $280,000

Annual Additions Limit (Applies to All Plans)

General Rule (2025):
Total Annual Additions = Lesser of:
• 100% of Annual Compensation, or
• $70,000

Includes:
• Employee deferrals
• Employer contributions
• Employer matches
• Profit-sharing allocations
• Forfeitures

Excludes:
• Catch-up contributions (if plan allows)
• Loan repayments
• Contributions made due to plan errors

Retirement Plan Types & Limits

401(k) Plan Details

Employee Deferral Limit (2025): $23,500

Catch-up Contribution (Ages 50+): $7,500 (total $31,000)

Extended Catch-up (Ages 60-63): $11,250 (total $34,750)

Combined Annual Limit: $70,000 or 100% of compensation (whichever is less)

Includes: Employee deferrals + employer match + profit sharing

Who Can Participate: Employees of companies offering 401(k) plans

Key Advantage: High contribution limits and potential employer matching

Note: Catch-up contributions made after age 60 must be Roth after-tax contributions if earnings exceed $145,000 in prior year (starting 2026).

403(b) Plan Details

Employee Deferral Limit (2025): $23,500

Catch-up Contribution (Ages 50+): $7,500 (total $31,000)

Extended Catch-up (Ages 60-63): $11,250 (total $34,750)

15-Year Service Catch-up: Up to $15,000 (lifetime cap)

Combined Annual Limit: $70,000 or 100% of compensation (whichever is less)

Who Can Participate: Employees of schools, colleges, hospitals, nonprofits, and clergy

Key Advantage: Similar to 401(k) but available to specific employers

Note: Certain employers offer tax-sheltered annuities or custodial accounts as vehicles for 403(b) plans.

Traditional IRA Details

Annual Contribution Limit (2025): $7,000

Catch-up Contribution (Ages 50+): $1,000 (total $8,000)

Combined Annual Limit: $70,000 or 100% of compensation (whichever is less)

Constraint: Cannot exceed earned income for the tax year

Who Can Participate: Anyone with earned income

Key Advantages: Tax-deductible contributions, simplicity, wide availability

Income Limits: Deductibility phases out if covered by employer plan and earn over threshold ($77,500 single, $123,000 married filing jointly in 2025)

Note: Contributions for a tax year can be made until the tax filing deadline (usually April 15 following the year).

SIMPLE IRA Details

Employee Deferral Limit (2025): $16,500

Catch-up Contribution (Ages 50+): $3,500 (total $20,000)

Employer Contribution (Required): 2-3% of compensation

Combined Annual Limit: $70,000 or 100% of compensation (whichever is less)

Who Can Participate: Businesses with 100 or fewer employees

Key Advantages: Lower compliance costs, easier than 401(k)

Requirement: Employer must contribute matching contributions or 2% non-elective contribution

Warning: SIMPLE IRAs have higher early withdrawal penalties (25% vs. 10%) and two-year waiting periods for rollovers.

SEP IRA Details

Maximum Annual Contribution (2025): $70,000 or 25% of net self-employment income

Formula: Net SE Income × 20% (approximately 25% less self-employment tax deduction)

Who Can Participate: Self-employed individuals, freelancers, small business owners

Key Advantages: Highest contribution limits, simplicity, no annual compliance testing

Flexibility: Can contribute 0% if business income is down some years

Employees: If employees exist, employer must contribute same percentage for all eligible employees

Note: SEP-IRAs are simple to set up and maintain, making them popular with self-employed individuals.

Defined Benefit Plan Details

Maximum Annual Benefit (2025): $280,000 or 100% of highest 3-year average

Annual Funding Contribution: Actuarially determined based on promised benefit

Who Can Participate: Self-employed individuals, small business owners wanting higher contributions

Key Advantages: Highest contribution potential, guarantees specific retirement income

Requirements: Requires annual actuarial calculations and plan administration

Best For: Established businesses with stable, predictable income

Warning: Defined Benefit Plans require professional administration, actuarial valuations, and compliance testing. Setup and maintenance costs are higher.

2025 Contribution Limits Summary

Plan Type Under Age 50 Age 50-59 / 64+ Age 60-63 Combined Limit
401(k) $23,500 $31,000 $34,750 $70,000 or 100% comp
403(b) $23,500 $31,000 $34,750 $70,000 or 100% comp
457(b) $23,500 $31,000 $34,750 $70,000 or 100% comp
Traditional IRA $7,000 $8,000 $8,000 $70,000 or 100% comp
Roth IRA $7,000 $8,000 $8,000 $70,000 or 100% comp
SIMPLE IRA $16,500 $20,000 $20,000 $70,000 or 100% comp
SEP IRA 25% of net SE income (approx. 20%) $70,000 max
Solo 401(k) $23,500 + 20% SE income $31,000 + 20% SE income $34,750 + 20% SE income $70,000 or 100% comp
Defined Benefit Actuarially determined $280,000 annual benefit

Key IRS Limits (2025)

Limit Type 2025 Amount 2024 Amount
Annual Compensation Limit $350,000 $345,000
Annual Additions Limit (DC Plans) $70,000 $69,000
Defined Benefit Maximum $280,000 $275,000
HCE Determination Threshold $160,000 $155,000
Social Security Wage Base $176,100 $168,600

Frequently Asked Questions

What is the difference between annual allowance and annual additions limit? +
Annual allowance and annual additions limit are the same thing in the US. Both refer to the maximum total amount that can be contributed to your retirement accounts in a calendar year. For 2025, this limit is $70,000 or 100% of compensation, whichever is less. This includes employee contributions, employer matches, profit-sharing, and forfeitures combined.
Can I contribute to multiple retirement plans? +
Yes, you can contribute to multiple plans, but your total contributions across all plans cannot exceed the annual additions limit ($70,000 in 2025 or 100% of compensation). For example, if you have a 401(k) and a Traditional IRA, your combined contributions must stay within this limit. However, Roth IRA contributions are tested separately from pre-tax IRA contributions.
What are catch-up contributions and who qualifies? +
Catch-up contributions allow individuals age 50 and older to contribute additional amounts beyond the standard limit. For 401(k) plans, the catch-up is $7,500 for ages 50-59 and 64+, or $11,250 for ages 60-63. For IRAs, the catch-up is $1,000. Catch-up contributions are allowed to encourage additional retirement savings for those close to retirement age.
What happens if I contribute more than the annual limit? +
Excess contributions are subject to double taxation and penalties. The excess amount is taxed as income in the year contributed, and then assessed a 6% annual excise tax on the excess amount. If the excess is not corrected, additional penalties and interest may apply. You must report excess contributions on Form 5329 with your tax return.
Do employer contributions count toward my annual limit? +
Yes, employer contributions (matches, profit-sharing, and forfeitures) count toward your annual additions limit. For example, if you contribute $23,500 to a 401(k) and your employer contributes $20,000 in matching, your total is $43,500 out of the $70,000 limit. You must coordinate with your employer to ensure combined contributions don't exceed the limit.
What plan type offers the highest contribution limits? +
Defined Benefit Plans typically offer the highest contribution limits because they can fund annual benefits up to $280,000 (2025). However, they require actuarial calculations and ongoing compliance. For self-employed individuals, a Solo 401(k) combined with a Defined Benefit plan can allow contributions exceeding $100,000 annually, making it an excellent option for maximizing retirement savings.
Can I contribute to a 401(k) and a SEP IRA in the same year? +
If you have self-employment income (such as freelance income), yes, you can contribute to both a 401(k) as an employee and a SEP IRA as a self-employed person. However, your total contributions to both plans cannot exceed $70,000 or 100% of your total compensation (combined employee and self-employment income).
When can I make contributions for a tax year? +
For employer plans like 401(k), contributions must be made by December 31 of the plan year. For IRAs (Traditional, Roth, SIMPLE, SEP), contributions can be made until the tax filing deadline of the following year (usually April 15). For example, 2025 IRA contributions can be made until April 15, 2026. Extensions don't extend the IRA contribution deadline.
How is compensation calculated for contribution limits? +
For employees, compensation includes wages, salary, bonuses, and commissions. For self-employed individuals, compensation is net self-employment income (gross income minus business expenses and the self-employment tax deduction). The IRS caps counted compensation at $350,000 for 2025. Your contributions cannot exceed 100% of your actual compensation for the year.
Is this calculator compliant with 2025 IRS regulations? +
This calculator uses 2025 IRS contribution limits and formulas. However, it provides general estimates only. Tax and retirement planning situations are complex and vary by individual. For accurate calculations specific to your situation, including questions about deductibility, income limits, and multiple employer plans, consult a qualified tax professional, CPA, or financial advisor.

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