The IRS has recently released the 2025 retirement plan contribution limits. For super-savers at BP, things are looking up. BP employees can now contribute $23,500-$34,750, depending on their age, of pre-tax or Roth savings to the BP Employee Savings Plan (ESP). That means that BP professionals can get up to $85,550-$98,800 of retirement savings into tax-efficient vessels in 2025, depending on their age. Let's look at the breakdown below.
| Ages | Pre-Tax | After Tax | Company Match | Backdoor Roth | HSA (Family) | Total |
| Under 50 |
$23,500 |
$22,000 |
$24,500 |
$7,000 |
$8,550 |
$85,550 |
| 50-54 |
$31,000 |
$22,000 |
$24,500 |
$8,000 |
$8,550 |
$94,050 |
| 55-59 |
$31,000 |
$22,000 |
$24,500 |
$8,000 |
$9,550 |
$95,050 |
| 60-63 |
$34,750 |
$22,000 |
$24,500 |
$8,000 |
$9,550 |
$98,800 |
|
64 & |
$31,000 |
$22,000 |
$24,500 |
$8,000 |
$9,550 |
$95,050 |
What is BP's 401(k) Match?
BP offers its employees a 7% per paycheck 401(k) matching contribution. While this seems simple, ensuring you contribute at least 7% of your pay every pay period to receive the full 7% company match is crucial. The maximum amount BP will put in any employee's 401(k) in 2025 is $24,500. At BP, it is easy to miss the opportunity to receive company contributions, so make sure you do the math every year!
How BP Employees Can Max Out the BP 401(k) if Under Age 50
If you’re under age 50, the total IRS limit for 401(k) contributions in 2025 from employee or employer contributions is $70,000. Here's how it breaks out:
- In Pre-tax or Roth: Employees under age 50 can contribute up to $23,500 across the two sources
- In Non-Roth After-Tax Contributions: The maximum BP allows for after-tax contributions is $22,000 in 2025.
- BP's Employee Contribution: BP contributes anywhere from 2-7% of an employee's compensation to their 401(k) each year. The maximum they can contribute in 2025 is $24,500 due to the IRS' income limits.
How BP Employees Can Max Out the BP 401(k) if Aged 50-59 or Over Age 63
After turning 50, but before reaching age 55 when an additional HSA catch-up comes into play, your contributions could look like this:
However, if you’re age 55-59 or over 63, the total IRS limit for 401(k) contributions in 2025 from employee or employer contributions is $77,500, which could be broken out as follows:
- In Pre-tax or Roth: Employees in these age brackets can contribute up to $31,000 across the two sources, thanks to a $7,500 catch-up allowance.
- In Non-Roth After-Tax Contributions: The maximum BP allows for after-tax contributions is $22,000 in 2025, regardless of age.
- BP's Employee Contribution: The maximum amount BP will contribute to an employee's ESP in 2025 is $24,500 due to the IRS' income limits.
If you max out all of these sources and the full HSA contribution limit for families with an individual catch-up because you're over 55, you could save over $95,050 in tax-efficient vessels in 2025!
How BP Employees Can Max Out the BP 401(k) if Age 60-63
Employees aged 60 to 63 after January 1, 2025, can contribute even more to workplace retirement plans thanks to legislation under Secure Act 2.0. Individuals in this age group have a higher catch-up contribution amount, indexed each year for inflation.
2025 Changes to 401(K) Contribution Limits for Those Ages 60-63 Under SECURE Act 2.0
Instead of the standard catch-up amount of $7,500 for individuals aged 50-59 or 63+, savers aged 60-63 can leverage a catch-up amount of $11,250 in 2025 to boost their retirement savings. Here's how it breaks out across sources:
- In Pre-tax or Roth: Employees in these age brackets can contribute up to $34,750 across the two sources. Thanks to the newly instated $11,250 catch-up amount, individuals can contribute $3,750 more than if they only had the standard over 50 catch-up of $7,500.
- In Non-Roth After-Tax Contributions: The maximum BP allows for after-tax contributions is $22,000 in 2025, regardless of age.
- BP's Employee Contribution: The maximum amount BP will contribute to an employee's ESP in 2025 is $24,500 due to the IRS' income limits.
This change provides a valuable opportunity for older employees to enhance their retirement savings as they approach retirement. Employees in this 3-year age bracket maxing out their ESP 401(k), a family HSA with catch-ups, and backdoor Roths can save up to $98,800 in 2025!
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2025 401(K) Income Limits
The annual compensation limit for 2025 has increased from $345,000 to $350,000. If you make over $350,000 in base and bonus compensation for 2025, remember to ensure you max out your BP ESP 401(k) contributions before earning $350,000. After you earn $350,000 of income, you and BP can no longer contribute to the 401(k), and contributions are deflected to another savings plan, the Excess Compensation Plan (ECP), with more stringent provisions.
Savings Strategies BP Employees Can Use to Save on Taxes
Backdoor Roth Contributions if You Can't Directly Contribute to Roth IRA
In 2025, the IRA contribution limit remains at $7,000 ($8,000 if over age 50). Though many are prevented from directly contributing to a Roth IRA, many BP employees can use the backdoor Roth strategy to get more saved in Roths each year.
Using a Mega Backdoor Roth with After-Tax 401(K) Contributions
The maximum amount BP employees can put toward after-tax contributions to get the full BP match has increased to $22,000. If you are contributing after-tax dollars to the BP 401(k), you can roll out the after-tax funds annually to a Roth IRA to take advantage of the mega backdoor Roth strategy for additional tax savings over time.
BP Employees Can Maximize Benefits with a Health Savings Account for Tax-Optimized Savings
A Health Savings Account (HSA) is often an under-utilized benefit that provides a unique triple tax advantage:
- Tax-Deductible Contributions: Contributions made to an HSA are tax-deductible, which means they lower your taxable income in the year you make the contribution. This can reduce your overall tax liability. This year, BP Employees can contribute up to $8,550 (or up to $10,550 if both spouses are over age 55 and contributing to their respective HSA accounts) for a family.
- Tax-Free Growth: The funds in your HSA can be invested, and any earnings or capital gains from these investments are tax-free as long as they remain in the account. This allows your savings to grow over time without incurring taxes.
- Tax-Free Withdrawals for Qualified Medical Expenses: When you use the HSA funds for qualified medical expenses, the withdrawals are entirely tax-free.
When using an HSA as a retirement fund, BP employees can benefit from both tax deductions and tax-free growth, making HSAs a valuable tool for long-term savings and retirement planning.
The 2025 limit adjustments will be advantageous for super-savers at BP, and it is important to make the most of these changes. At Willis Johnson & Associates, we work with our BP clients to ensure they get the full 7% company match, take advantage of backdoor Roth IRAs to ensure they are on track for success, and facilitate after-tax roll-outs from the 401(k) to get the maximum amount of savings. If you have any questions about the 2025 contribution and compensation limits, please contact your advisor or schedule a free consultation with one of our BP benefits specialists.
