As the clock ticks down on 2025, the scramble to tie up loose ends begins — from last-minute holiday shopping to prepping for year-end taxes and taking your RMDs. It’s also a prime time to turn your attention to your employer-sponsored 401(k).
The good news? You still have time, and you don’t need to overhaul everything overnight. Focus on which steps you can take today to review, refine, and fortify your retirement savings, like tweaking your portfolio and making strategic adjustments to position yourself stronger heading into 2026.
We’ll cover the key contribution limits for 2025 and 2026, but remember, with just weeks left, ramping up your deferral rate now might not help much for 2025, as it’s likely too late to increase contributions without causing payroll glitches or over-contribution penalties.
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Set a calendar alert for December 15 to beat any holiday procrastination. Then take these all-important 401(k) actions before the ball drops.
2025 contribution limits, and why changes might be tricky now
For tax year 2025, the IRS allows a maximum employee salary deferral of $23,500 to your 401(k), whether traditional 401(k), pre-tax, or Roth 401(k), after-tax. If you're 50 or older by December 31, you can add a catch-up contribution of $7,500, bringing your total to $31,000. Under SECURE 2.0, you can get an even bigger boost. If you’re turning 60, 61, 62, or 63 this year, ‘super catch-up contributions’ jump to $11,250, pushing your total to $34,750.
Keep in mind that your eligibility for catch-up contributions is based on age by December 31, 2025. Always verify your plan's options; not all offer Roth deferrals or super catch-ups.
Also, you may theoretically squeeze in a bit more by adjusting your contribution mid-December, but essentially, it might be too late. Your workplace payroll department might not process changes in time, and exceeding your deferral limit could trigger over-the-limit contributions come April’s tax season.
Looking ahead to 2026, the maximum employee salary deferral limits rise slightly to $24,500, with a $8,000 standard catch-up if you're 50 or older or $11,250 for ages 60-63. This figure remains the same from 2025. With catch-ups, if you're age 50 or older, you'll be able to contribute up to $32,500, and if you're between 60 and 63 and your plan allows, you'll be able to contribute up to $35,750 in 2026.
Read our story: 6 Changes to IRAs, 401(k)s and HSAs in 2026.
Review and rebalance your portfolio
With the potential for markets to be volatile through the holidays, now’s the perfect time (before year-end) to audit your 401(k)’s asset mix. Stocks may have grown faster than bonds, throwing your plan off track and making it riskier than you want. A quick rebalance now keeps your retirement savings on the right path.
Assess your risk tolerance: Steve Azoury, ChFC® and owner of Azoury Financial in Troy, Michigan, adds, “Before 2025 is over, and unfortunately, it’ll be before you know it, you should review your 401(k) and make any changes necessary.” In fact, you may want to check your risk tolerance and rebalance. “You may be too aggressive or too conservative for your liking. Circumstances change, and the risk level that felt right this year might feel too aggressive (or too timid) in 2026."
Diversify carefully: Don’t bother chasing last-minute “hot” stocks. Alternatively, you may want to stick with broad index funds or ETFs. Rebalancing your 401(k) today won’t trigger a single penny in taxes anyway, because your money grows tax-deferred.
Understand year-end tax advantages: If your plan allows in-service withdrawals or Roth conversions, which are gaining in popularity, consider swapping pre-tax funds for Roth funds before year-end. This can lock in today’s rates for tax-free growth. But remember, conversions count as income and could potentially bump up your tax bracket.
"With the year-end approaching, it's increasingly important to evaluate any tax planning opportunities," said John Jones, CFP®, EA and investment advisor representative at Heritage Financial in Newberry, Florida. "Performing a Roth conversion, if this is beneficial for your holistic financial plan, should be done before the end of 2025.”
Jones goes on to explain that high-earners should check out a mega back-door Roth conversion, which lets you contribute significantly more to your Roth account than standard limits, enabling tax-free growth and withdrawals in retirement. "It also gives you more flexibility since Roth accounts don’t require minimum distributions (RMDs) during the account owner's lifetime. This makes them particularly advantageous for estate planning."
Azoury agrees that if you’re older, you may want to consider rolling over a traditional 401(k) to a Roth IRA (which must be done before this year ends), and adds. “It's also not too late to review your 401(k) beneficiaries. Ensure they’re up-to-date and the funds will go where you want, should something happen to you."
Evaluate holdings and make changes where necessary
Your personal contributions — $23,500 or $31,000 deferral limit for 2025 — might already be maxed out or close to it, so you can’t put in another dollar of your own money into your 401(k) this year. Even so, you still have full control over where the money that is already in the plan is invested.
"Evaluating investment allocations, performance, and the long-term plan to ensure your account is allocated in alignment with your long-term goals is key," said Heritage Financial's Jones.
You might also want to consider dumping any actively managed funds that may be charging more than 0.76%, according to Schwab, and move the money into broad index funds or target-date funds. If your plan recently added ESG funds, keep them if the higher cost is worth it to you. Otherwise, skip them.
Another thing: The money in your 401(k) doesn’t get taxed until you make withdrawals in retirement. However, you can lock in this year’s gains today without owing a dime in taxes.
If your plan allows in-service withdrawals or a brokerage window, you can also grab the investments that didn’t do so well and use those losses to offset future taxes when you eventually pull your money out.
Setting yourself up for a strong 2026 in 2025
While most of your energy should go to wrapping up 2025, you can also use this time to set yourself up for success in the new year. For example, consider automatically increasing your 401(k) contributions by 1% starting in January, allowing compounding to amplify your gains. If your employer offers auto-enrollment (now mandatory for new plans under SECURE 2.0, take advantage of it. Above all, be sure to contribute enough to snag your full employer match.
Mindy Yu, CIMA, Sr. Director of Investing, Betterment at Work, adds that if you expect a year-end bonus, consider depositing part of it into your 401(k) so that it’s included in this tax year, especially if you’re tracking toward the annual limit.
She also points out that when choosing between Roth or traditional contributions, "let your current tax bracket be your guide — higher earners often benefit from traditional contributions now if the expectation is that your tax bracket will be lower in the future, while those in lower brackets today may get more long-term value from Roth if you expect your earnings to grow in the future."
Use the impending new year as a chance to get your house in order
December 31, 2025, is a “get-your-house-in-order” moment to secure your financial future. By rebalancing, tweaking holdings, and peeking into the new year, you’ll close 2025 with a 401(k) that’s not just growing, but aligned with the secure financial future you want and need.
Now is also the perfect time to get some advice, as you end one year and start another, says Jones. He notes: "Working closely with a holistic financial planner could provide you with a good opportunity to look over your situation and review for inefficiencies and optimization in a comprehensive approach before the year ends."
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