The IRS has confirmed that starting in 2025, workers aged 60 to 63 will have the opportunity to boost their retirement savings through enhanced 401(k) contribution limits. This development stems from provisions in the SECURE 2.0 Act, enacted in 2022, which aims to support those nearing retirement. While individuals aged 50 and over have long had the option to make additional “catch-up” contributions—set at $7,500 for 2024 and 2025—this new measure introduces a “super” catch-up contribution.
This allows individuals in the 60-63 age bracket to contribute up to an extra $11,250, bringing their total possible savings to $34,750 for 2025 when combined with their normal contributions. The expanded catch-up contributions are designed to help older Americans, particularly those who haven’t been able to prioritize savings earlier due to lower earnings or financial demands such as raising children. Despite these measures, over one-third of workers aged 55 to 64 lacked access to employer-sponsored retirement plans as of 2019, according to the Economic Policy Institute (EPI).
However, these enhanced saving options are temporary.
Enhanced catch-up contributions for 2025
The limit reverts to the standard contribution cap of $31,000 once an individual reaches 64.
The feasibility of taking full advantage of these contributions is a concern. While the policy supports those who can afford to save more, many Americans, constrained by mortgage payments, transportation costs, and daily expenses, may find it challenging to benefit from the higher contribution limits. The Economic Policy Institute found that 57.2% of employees nearing retirement contribute to a plan, leaving over 40% without any contributions, let alone the ability to make super catch-up contributions.
Despite these challenges, the new rules underscore the importance of saving as much as possible for retirement. For those who can, maximizing retirement contributions, including these super catch-up contributions, is crucial for financial independence in retirement. Those who cannot contribute significantly are encouraged to invest wisely and reduce expenses where possible to save at least some amount for the future.
