In 2023, 67% of American workers had access to a defined contribution plan such as a 401(k), 403(b), or 457(b) plan. Source: U.S. Department of Labor, 2025 Employer-Sponsored Retirement Plans Employer-sponsored retirement plans such as Section 401(k), 403(b), and 457 plans offer higher contribution limits than IRAs. In 2025, you can contribute up to $23,500, plus an additional $7,500 if you are age 50 to 59 or 64 or older. If you reach age 60 to 63 in 2025, your additional contribution limit is $11,250. You generally contribute a percentage of your salary using pre-tax funds (or after-tax funds to a Roth account), and you don’t have to pay current taxes on contributions or any earnings until you take withdrawals in retirement. Employers may offer to match a percentage of your employer-plan contributions with additional funds. Distributions from tax-deferred employer-sponsored retirement plans are taxed as ordinary income. (Qualified Roth employer plan distributions are tax-free.) Withdrawals taken prior to reaching age 59½ may be subject to a 10% federal tax penalty, unless an exception applies. Generally, required minimum distributions (RMDs) from traditional, pre-tax employer-sponsored plan accounts must begin for the year in which you reach age 73 (75 for those who reach age 73 after December 31, 2032).
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