Older Workers to Get ‘Super’ 401(k) Catch-Up Contributions in 2025 – The New York Times

Will you be 60 to 63 next year? lucky you! You also have the option of contributing thousands more to your workplace retirement plan.

That is if they can afford it, but many workers will find that impossible.

Federal tax law already allows people age 50 and older to make additional contributions above the annual deferral limit to a 401(k) or similar employer retirement plan. The standard “catch-up” contribution for this year and next is $7,500.

But as part of the federal Secure 2.0 Tax Act passed in 2022, catch-up contribution limits will be higher for people in their early 60s starting next year. They can contribute up to a maximum. $11,250 Next year, an additional $3,750 in contributions will be paid over and above the general deferral limit of $23,500 for 2025, the Internal Revenue Service said. That means you could potentially contribute up to $34,750 total to your workplace retirement account.

This additional contribution, sometimes referred to as the 'enhanced' or 'super' catch-up option, is available to workers aged 60, 61, 62 and 63. If you reach that age during the calendar year, you are eligible, Dan Snyder said. Director of Personal Financial Planning for the American Institute of Certified Public Accountants. (Once a saver reaches age 64, they are no longer eligible for additional savings, but can make standard catch-up contributions.)

The idea is to give people who are nearing retirement age but are lagging behind in saving the opportunity to save even more money for their post-work life. “This is an opportunity to atone for past mistakes,” said David John, senior strategic policy adviser at the AARP Public Policy Institute, which focuses on issues related to older Americans.

As the population ages, there are concerns about getting Americans to save more for retirement, especially as the number of companies offering pensions has declined. In a typical household headed by a person between the ages of 55 and 64, Just $10,000 saved in retirement accounts, according to an analysis of federal data by the Economic Policy Institute and the Schwartz Center for Economic Policy Analysis.