The SECURE 2.0 Act has significantly changed retirement savings rules in recent years. Those changes include, but aren’t limited to, a new RMD age and increased access to 401(k) plans for part-time workers.
And there’s more. Starting next year, SECURE 2.0 enhances catch-up contributions for certain older adults. If you’re 60, 61, 62, or 63 in 2025, you may be able to leverage this provision to increase your savings for retirement.
These contributions could also lower your taxable income and potentially reduce your overall tax liability.
Here’s what you need to know about how the new higher catch-up contribution limits will work in most employer-sponsored plans.
Age 50+ catch-up contribution limits 2024
Before we dive into higher catch-up limits for ages 60-63 it helps to review standard Age 50+ Catch-ups. Age 50+ Catch-up contributions are additional retirement savings allowances for individuals 50 and older, designed to help boost their retirement savings.
These provisions allow eligible savers to contribute beyond the standard annual limits in various retirement accounts like 401(k)s and IRAs.
This could help make up for years of inadequate savings or maximize your tax-advantaged retirement funds. However, note that Age 50+ Catch-ups are optional for eligible employees if the employer-sponsored plan permits them.
- For 2024, the standard annual deferral limit is $23,000, and the catch-up contribution limit for those age 50 and older is $7,500.
- That means an active participant 50 or older can contribute up to $30,500 this year.
SECURE 2.0 higher age 50+ catch-up contribution limits for 60-63
Under SECURE 2.0, beginning in 2025, individuals ages 60 to 63 by Dec. 31 will be eligible for increased catch-up contributions in their retirement plans.
These higher catch-up limits apply to 401(k), 403(b), and governmental 457(b) plans that currently offer Age 50+ catch-up contributions. It’s also important to note that this change is optional for employers. So, each plan sponsor will decide whether to implement this feature in their retirement plans.
This higher age 50+ 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, the IRS has just announced that for 2025, the catch-up limit for those age 50+ is $7,500 and the higher catch-up contribution limit for those age 60-63 is $11,250.
To qualify for the higher catch-up contributions, participants must meet specific criteria:
- Be 60, 61, 62, or 63 on Dec. of the calendar year
- Generally, already contributed the maximum deferral amount
Note: 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. As Kiplinger has reported, IRS rules for this provision have been delayed until 2026.
However, when that provision kicks in, 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.
Making Age 50+ Catch-up contributions on an after-tax Roth basis means paying taxes on your retirement savings during years when you sometimes earn more.
2025 Age 50+ Catch-up limits: Bottom line
Introducing higher age 50+ catch-up contribution limits for ages 60-63 under SECURE 2.0 is part of a broader effort to encourage more workers to save for retirement.
With that in mind, allowing increased savings during key pre-retirement years could help some who haven’t been able to save as much earlier in their careers.
However, how this works will depend on employers’ ability and willingness to adapt their plans and systems to accommodate these new catch-up contribution limits as of Jan. 1.
