2025 Enhanced Catch-Up Contributions

Thanks to a “super catch-up” option under the Secure 2.0 Act, effective January 1, 2025, workers ages 60 to 63 have a chance to contribute an additional $3,750 to their employer-sponsored retirement accounts, for a total catch-up contribution of $11,250. That can make a significant difference in the amount of money individuals can invest on a tax-deferred basis as they near retirement, as shown in the chart below.

2025 Enhanced Catch-up Contribution¹

For plan participants seeking to take advantage of the new higher catch-up contribution limits this year, there are a few things to keep in mind:

• Before any catch-up contributions can be made, participants must first contribute the maximum annual amount of $23,500 for 2025 to their employer plans.
• You must be age 60, 61, 62, or 63 by the end of the calendar year to be eligible to make the additional $3,750 catch-up contribution. (Once participants turn 64, they revert to the standard limit for age 50 – 59, or 64 and older.)
• Enhanced catch-up contribution amounts apply to 401(k), 403(b), and governmental 457(b) plans, as well as the federal government’s Thrift Savings Plan. (They do not apply to individual retirement accounts (IRAs) where the catch-up contribution remains at $1,000 for those age 50 and over in 2025).
• This change is optional for employers, so you’ll want to check to see if your employer plans to implement this feature in their retirement plan.

While not everyone may be in a position to make catch-up contributions, try to contribute at match level or above if your employer offers matching contributions, so you’re not leaving money on the table. Keep in mind that any amount saved through qualified retirement accounts can help move you closer to your important goals since earnings in these accounts grow on a tax-deferred basis.

To learn more about structuring a plan for retirement income, contact the office now to schedule a time to talk.

^{1)“401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000.” IRS.gov, Nov. 1, 2024, https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000.}