Catch-Up Contributions Expanded: How SECURE 2.0 Boosts Savings for Ages 60-63
The SECURE 2.0 Act has introduced significant changes to retirement savings rules, including a new Required Minimum Distribution (RMD) age and increased access to 401(k) plans for part-time workers. One key provision starting in 2025 is the enhancement of catch-up contributions for adults age 50 and older.
Who is Eligible?
If you’re 60, 61, 62, or 63 in 2025, you may be able to take advantage of this provision to increase your retirement savings. These contributions can also lower your taxable income and potentially reduce your overall tax liability.
Age 50+ Catch-Up Contribution Limits for 2025
Before diving into the new higher catch-up limits, let’s review the standard catch-up contribution limits:
- Standard annual deferral limit: $23,500
- Catch-up contribution limit for those age 50 and older: $7,500
- Total contribution limit for those age 50 and older: $31,000
SECURE 2.0 Higher Age 50+ Catch-Up Contribution Limits for 60-63
Starting in 2025, individuals ages 60 to 63 by December 31 will be eligible for increased catch-up contributions in their retirement plans. These higher catch-up limits apply to 401(k) plans, 403(b) plans, and Governmental 457(b) plans.
The higher catch-up contribution limit for ages 60-63 is $10,000 or 150% of the standard age 50+ catch-up contribution limit, whichever is greater. For example, in 2025, the catch-up limit for those age 50 and older is $7,500, and the higher catch-up contribution limit for those age 60-63 is $11,250.
Qualifying Criteria
To qualify for the higher catch-up contributions, participants must be age 60, 61, 62, or 63 on December 31 of the calendar year and have already contributed the maximum deferral amount.
Note that once participants turn 64, they revert to the standard age 50+ catch-up contribution limit.
Roth Catch-Up Rule for High Earners
SECURE 2.0 also includes new provisions regarding Roth contributions for high earners. Starting in 2026, if a participant’s wages with the employer sponsoring the retirement plan exceed $145,000 in the previous year (subject to cost-of-living adjustments), any age 50+ catch-up contributions must be made on a Roth basis.
2025 Age 50+ Catch-Up Limits: Bottom Line
The introduction of higher age 50+ catch-up contribution limits for ages 60-63 under SECURE 2.0 aims to encourage more workers to save for retirement. Allowing increased savings during key pre-retirement years can help those who haven’t been able to save as much earlier in their careers. However, the implementation of these new catch-up contribution limits depends on an employer’s ability to adapt their plans and systems.
Source: IRS.gov
Patricia L. Hutchinson
Director of Retirement Plan Services
MBA