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 |
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!
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:
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:
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!
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.
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:
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!
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.
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.
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.
A Health Savings Account (HSA) is often an under-utilized benefit that provides a unique triple tax advantage:
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.