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If you're looking to save more for retirement, it's not too early to increase your 401(k) plan contributions for 2025, financial experts say.
For 2025, you can defer up to $23,500 into your 401(k) plan, up from $23,000 in 2024. For workers age 50 and older, the 401(k) catch-up contribution will remain at $7,500 in 2025.
But Tommy Lucas, a certified financial planner and registered agent with Moisand Fitzgerald Tamayo in Orlando, Fla., says some savers have the option of “superfunding” through 401(k) catch-up contributions. It is said that there is an opportunity for
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Enacted by Secure 2.0, the 2025 catch-up contribution limit increases to $11,250 for employees ages 60 to 63, bringing the total 401(k) deferral for these investors to $34,750.
“Nobody probably knows about the additional increases,” said Kathryn Vallega, a Boston-area CFP, registered agent and founder of Green Bee Advisory, adding that it will take time before the public becomes aware of the new opportunities. He said it could cost.
But experts say increasing contributions later can still be beneficial for savers in this age group.
Increase your 401(k) deferral in 2025 now
If you plan on adjusting your 401(k) deferral to 2025, “now is the time to do it,” Varega said.
It typically takes several pay periods for changes to 401(k) contributions to take effect, and if you wait, you may not receive the higher January contribution, he said. Ta.
If you miss out on a large deposit early on, you can still get the most out of your plan by increasing your deferrals later in the year. But higher percentages can “impact cash flow more than people typically want,” Vallega said.
Lucas said he updated next year's 401(k) contributions for customers in early December.
“It's already set for next year,” he said. “We've been on track since our first payroll.”
Of course, many workers can't afford to max out their 401(k) plans every year.
Approximately 14% of employees I maxed out my 401(k) plan Vanguard's 2024 How America Saves report is based on data from 1,500 eligible plans and nearly 5 million participants.
