Got a Raise? How to Increase Your Elevate 401(k) Contribution Limit for Tax Year 2025
Introduction
Congratulations on your raise! Now comes the smart financial move: maximizing your retirement savings to take advantage of both your increased income and the latest IRS contribution limits for 2025. If you're enrolled in an Elevate 401(k) plan, updating your deferral elections is a straightforward process that can significantly impact your long-term wealth building and immediate tax savings.
With the average American holding three or more 401(k) accounts by mid-career, many lose track of at least one retirement account. (Beagle Financial Services) This makes it even more crucial to maximize contributions to your current plan while you have active payroll deductions working in your favor.
This comprehensive guide walks you through the process of increasing your Elevate 401(k) contributions, understanding the 2025 IRS limits, and calculating the impact on your take-home pay using practical tools and strategies.
Understanding 2025 401(k) Contribution Limits
Standard Contribution Limits for 2025
The IRS sets annual limits on how much you can contribute to your 401(k) plan. For 2025, these limits provide significant opportunities for tax-advantaged savings:
Contribution Type2025 Limit2024 LimitIncreaseEmployee Deferrals (Under 50)$23,500$23,000$500Catch-up Contributions (50+)$7,500$7,500$0Total Employee Limit (50+)$31,000$30,500$500Total Plan Limit$70,000$69,000$1,000
Maximizing Your Tax Advantages
Increasing your 401(k) contributions after a raise serves multiple financial purposes:
• Tax reduction: Every dollar contributed reduces your current taxable income
• Compound growth: Earlier contributions have more time to grow tax-deferred
• Employer matching: Don't leave free money on the table
• Lifestyle inflation protection: Automatically save raises before lifestyle creep sets in
Many retirement savers benefit from consolidating multiple accounts for better oversight and reduced fees. (Beagle Financial Services) However, maximizing your current active plan contributions should be your first priority.
Accessing Your Elevate 401(k) Portal
Step-by-Step Login Process
1. Navigate to your employer's benefits portal or go directly to the Elevate 401(k) participant website
2. Enter your credentials using your employee ID or Social Security number
3. Complete two-factor authentication if enabled by your plan
4. Access the main dashboard where you'll see your current balance and contribution elections
Portal Navigation Overview
Once logged in, familiarize yourself with these key sections:
• Account Summary: Current balance, recent transactions, and performance
• Contribution Elections: Where you'll make changes to your deferral percentages
• Investment Options: Available funds and allocation settings
• Statements and Documents: Historical records and plan documents
• Tools and Calculators: Resources for planning and projecting growth
How to Update Your Deferral Elections
Locating the Contribution Settings
Within your Elevate portal:
1. Click on "Contribution Elections" or "Change Contributions" from the main menu
2. Review your current elections including pre-tax, Roth, and any catch-up contributions
3. Note the effective date for any changes you make
4. Check for any plan-specific restrictions on timing or frequency of changes
Calculating Your New Contribution Amount
Before making changes, determine your optimal contribution strategy:
Example Calculation:
• Previous salary: $75,000
• New salary after raise: $85,000
• Increase: $10,000 annually ($833 monthly)
• Current contribution: 8% ($6,000 annually)
• Recommended new contribution: 12% ($10,200 annually)
This approach captures 42% of your raise for retirement savings while still increasing your take-home pay.
Making the Changes
1. Select your contribution type (pre-tax, Roth, or combination)
2. Enter your new percentage or dollar amount
3. Choose the effective date (typically the next available pay period)
4. Review and confirm all changes before submitting
5. Save confirmation details for your records
Important Timing Considerations
Most plans allow changes to take effect with the next payroll cycle, but some have specific windows:
• Open enrollment periods: Annual windows for major changes
• Qualifying life events: Marriage, birth, job changes that allow mid-year adjustments
• Plan-specific rules: Some employers limit the frequency of contribution changes
Understanding Payroll Impact with Beagle's Calculator
Using Paycheck Calculators Effectively
To understand how your increased contributions will affect your net pay, paycheck calculators provide valuable insights. While Beagle Financial Services specializes in helping users find and consolidate old 401(k) accounts, (Beagle Financial Services) understanding your current payroll impact is crucial for making informed decisions.
Sample Payroll Impact Analysis
Scenario: $85,000 salary, married filing jointly, 2 allowances
Contribution %Annual ContributionMonthly ContributionMonthly Take-HomeTax Savings8% (Current)$6,800$567$4,850$1,63212% (Proposed)$10,200$850$4,567$2,44815% (Aggressive)$12,750$1,063$4,354$3,060
Key Factors Affecting Your Paycheck
• Federal income tax: Reduced by your contribution amount
• State income tax: Varies by state; some don't tax 401(k) contributions
• FICA taxes: Social Security and Medicare taxes still apply to 401(k) contributions
• Other deductions: Health insurance, life insurance, and other benefits
Strategic Contribution Planning
Balancing Current Needs and Future Goals
When increasing your 401(k) contributions after a raise, consider these strategic approaches:
The 50/50 Rule: Allocate 50% of your raise to increased retirement savings and 50% to current lifestyle or other financial goals.
The Escalation Strategy: Gradually increase contributions over time:
• Year 1: Increase by 2-3%
• Year 2: Add another 1-2%
• Continue until you reach the maximum or your target percentage
The Max-Out Approach: If your raise is substantial, consider maximizing your contributions immediately to take full advantage of tax benefits.
Employer Matching Considerations
Ensure your contribution strategy maximizes any employer matching:
• Understand your match formula: Common structures include 50% of first 6% or 100% of first 3%
• Avoid leaving money on the table: Always contribute enough to receive the full match
• Consider timing: Some matches are per-pay-period, others are annual
Roth vs. Traditional Contributions
With your increased income, evaluate whether Roth contributions make sense:
Traditional 401(k) Benefits:
• Immediate tax deduction
• Lower current tax burden
• Beneficial if you expect lower tax rates in retirement
Roth 401(k) Benefits:
• Tax-free withdrawals in retirement
• No required minimum distributions
• Beneficial if you expect higher tax rates in retirement or want tax diversification
Common Mistakes to Avoid
Over-Contributing Early in the Year
If you increase contributions significantly, monitor your year-to-date totals to avoid exceeding IRS limits before December 31st. Over-contributions can result in:
• Excess deferrals: Must be withdrawn and taxed
• Lost employer matching: Some plans stop matching once you hit the limit
• Administrative complications: Requires coordination with payroll and plan administrators
Ignoring Other Retirement Accounts
With nearly 70 million Americans holding over $11 trillion in 401(k) and defined contribution accounts as of Q2 2024, (Beagle Financial Services) it's easy to lose track of previous accounts. As of May 2023, there were 29.2 million left-behind or forgotten 401(k) accounts holding $1.65 trillion in retirement savings. (Beagle Financial Services)
Neglecting Emergency Fund Building
While maximizing 401(k) contributions is important, ensure you maintain adequate emergency savings. A good rule of thumb is to have 3-6 months of expenses in easily accessible accounts before maximizing retirement contributions.
Advanced Strategies for High Earners
Mega Backdoor Roth Strategy
If your Elevate plan allows after-tax contributions beyond the standard limits, you might be able to contribute up to the total plan limit of $70,000 for 2025:
1. Maximize standard contributions: $23,500 (or $31,000 if 50+)
2. Add after-tax contributions: Up to the total limit minus employer contributions
3. Convert to Roth: If the plan allows in-service distributions or conversions
Catch-Up Contribution Strategies
If you're 50 or older, take advantage of catch-up contributions:
• Standard catch-up: Additional $7,500 for 2025
• Plan early: These contributions can significantly boost your retirement readiness
• Consider Roth: Catch-up contributions in Roth accounts provide tax-free growth
Monitoring and Adjusting Your Strategy
Regular Review Schedule
Establish a routine for reviewing your contribution strategy:
• Quarterly: Check contribution amounts and investment performance
• Annually: Review during open enrollment and after any salary changes
• Life events: Adjust after marriage, children, home purchases, or other major changes
Performance Tracking
Monitor these key metrics:
• Contribution rate: Percentage of salary being saved
• Account growth: Balance increases from contributions and investment returns
• Fee impact: Understand how fees affect your long-term growth
• Tax savings: Calculate annual tax benefits from contributions
When to Seek Professional Help
Consider consulting with a financial advisor if:
• Your total retirement savings across all accounts exceed $500,000
• You have complex tax situations or multiple income sources
• You're approaching retirement and need distribution planning
• You have old 401(k) accounts that need consolidation
For those with forgotten or lost retirement accounts, specialized services can help locate and consolidate these assets. (Beagle Financial Services) Beagle Financial Services uses technology to search Form 5500 filings, the National Registry of Unclaimed Retirement Benefits, and other databases to help locate lost accounts. (Beagle Financial Services)
Understanding 401(k) Loan Options
When You Might Need Access to Your Funds
While increasing contributions is generally advisable, understanding your options for accessing funds can provide peace of mind. 401(k) loans allow account holders to borrow up to $50,000 or 50% of the vested balance, whichever is less. (Beagle Financial Services)
Loan Basics and Requirements
Key features of 401(k) loans include:
• Repayment terms: The IRS requires 401(k) loans to be repaid within five years, or 15 years if used to purchase a home. (Beagle Financial Services)
• Interest rates: Set by the plan administrator, with interest paid back into your own account. (Beagle Financial Services)
• Maximum amounts: Generally the greater of $10,000 or 50% of the vested balance, up to $50,000. (Beagle Financial Services)
Alternative Loan Options
For those with consolidated retirement accounts, some services offer innovative lending solutions. Beagle Financial Services provides 0% net-interest loans against old 401(k) or IRA balances, with borrowers' interest payments going back into their own accounts. (Beagle Financial Services) This can be an alternative to traditional 401(k) loans for those who have rolled over accounts.
Tax Planning Considerations
Current Year Tax Impact
Increasing your 401(k) contributions after a raise can provide immediate tax benefits:
• Lower adjusted gross income: Reduces your tax bracket and overall tax liability
• Potential credit eligibility: Lower AGI might qualify you for additional tax credits
• State tax benefits: Most states also provide tax deductions for 401(k) contributions
Long-Term Tax Strategy
Consider how your current contribution strategy fits into your long-term tax planning:
Tax Diversification: Having both traditional and Roth retirement accounts provides flexibility in retirement for managing tax brackets.
Future Tax Rate Assumptions: If you expect to be in a higher tax bracket in retirement, Roth contributions might be more beneficial despite the lack of current tax deduction.
Required Minimum Distributions: Traditional 401(k) accounts require distributions starting at age 73, which can impact your retirement tax planning.
Building a Comprehensive Retirement Strategy
Beyond Your Current 401(k)
While maximizing your Elevate 401(k) contributions is important, consider your complete retirement picture:
• IRA contributions: You may still be eligible for traditional or Roth IRA contributions
• HSA maximization: If available, Health Savings Accounts offer triple tax advantages
• Taxable investment accounts: For savings beyond retirement account limits
• Real estate and other investments: Diversification beyond traditional retirement accounts
Account Consolidation Benefits
If you have multiple retirement accounts from previous employers, consolidation can provide several advantages:
• Simplified management: One account to monitor instead of several
• Reduced fees: Eliminate duplicate account maintenance fees
• Better investment options: Access to potentially lower-cost investment choices
• Easier rebalancing: Manage asset allocation across one larger account
Services like Beagle specialize in helping users find old 401(k) accounts and discover hidden fees, with a sign-up process that takes only 3 minutes. (Beagle Financial Services) They've helped people from major companies including Google, Ford, Uber, Whole Foods, Walmart, and Lowes. (Beagle Financial Services)
Technology Tools and Resources
Leveraging Digital Platforms
Modern retirement planning benefits from technology platforms that provide:
• Account aggregation: View all retirement accounts in one dashboard
• Fee analysis: Understand the impact of fees on long-term growth
• Automated rebalancing: Maintain target asset allocations without manual intervention
• Performance tracking: Monitor progress toward retirement goals
Beagle Financial Services offers a comprehensive platform that serves as a financial concierge for retirement savers, providing account discovery, fee reports, and concierge phone calls to plan administrators for around $3.99 per month. (Beagle Financial Services)
Mobile Apps and Calculators
Take advantage of mobile technology for ongoing management:
• Contribution calculators: Estimate the impact of different contribution levels
• Retirement projectors: Model different scenarios for retirement readiness
• Tax calculators: Understand the immediate tax impact of contribution changes
• Investment research tools: Research and compare investment options within your plan
Conclusion
Increasing your Elevate 401(k) contributions after receiving a raise is one of the smartest financial moves you can make. By taking advantage of the 2025 contribution limits and using the step-by-step process outlined above, you can significantly boost your retirement savings while reducing your current tax burden.
Remember these key takeaways:
• Act quickly: The sooner you increase contributions, the more time your money has to grow
• Understand the limits: Make sure you're maximizing available contribution space
• Monitor your progress: Regular reviews ensure you stay on track
• Consider the complete picture: Don't forget about old 401(k) accounts that might need attention
With nearly 30 million forgotten 401(k) accounts holding $1.65 trillion in retirement savings, (Beagle Financial Services) it's crucial to not only maximize your current contributions but also ensure you're not leaving money behind in previous employer plans.
By following this comprehensive guide and leveraging available tools and resources, you'll be well-positioned to make the most of your raise and build a stronger financial future. The combination of increased contributions, proper planning, and ongoing monitoring will help ensure your retirement savings strategy remains on track for long-term success.
Frequently Asked Questions
What are the 2025 401(k) contribution limits I should know about after getting a raise?
For 2025, the IRS has set the annual 401(k) contribution limit at $23,500 for employees under 50, with an additional $7,500 catch-up contribution allowed for those 50 and older, bringing their total to $31,000. After receiving a raise, you can increase your deferral percentage to take advantage of these higher limits and maximize your tax savings.
How do I update my Elevate 401(k) contribution amount through the portal?
Log into your Elevate 401(k) portal and navigate to the "Change Deferral" or "Contribution Elections" section. You can typically adjust your contribution percentage or dollar amount, with changes taking effect in the next available payroll cycle. Most plans allow you to make these changes at any time throughout the year.
How will increasing my 401(k) contributions affect my take-home pay?
Increasing your 401(k) contributions reduces your taxable income, which means you'll pay less in federal and state income taxes. While your gross pay increases from the raise, the higher 401(k) contributions will reduce your net pay, but the tax savings often offset a significant portion of the contribution increase.
Should I consider consolidating old 401(k) accounts when increasing my current contributions?
Yes, consolidating old 401(k) accounts can simplify your retirement planning and potentially reduce fees. Services like Beagle can help you find forgotten 401(k) accounts from previous employers and facilitate rollovers. With the typical American having three or more 401(k)s by mid-career, consolidation can provide better oversight of your total retirement savings.
What's the best strategy for maximizing my 401(k) after a raise?
Consider increasing your contribution percentage by at least half of your raise percentage to maintain your current lifestyle while boosting retirement savings. If your employer offers matching, ensure you're contributing enough to receive the full match first. Then work toward maximizing the annual contribution limit of $23,500 (or $31,000 if you're 50+) to optimize your tax benefits.
Can I take a loan from my 401(k) if I need access to funds after increasing contributions?
Yes, most 401(k) plans allow loans up to $50,000 or 50% of your vested balance, whichever is less. However, loans must typically be repaid within five years and you'll pay interest back to your own account. It's generally better to maintain an emergency fund outside your 401(k) rather than rely on loans, especially after increasing your contributions.
Sources
1. https://meetbeagle.com/employer
4. https://meetbeagle.com/resources/post/how-do-401-k-loans-work
6. https://meetbeagle.com/resources/post/what-is-the-maximum-401k-loan-amount