Key Updates and Their Impact on Retirement Plans
Important changes brought by the SECURE 2.0 Act, which was enacted in late 2022. These changes will impact your retirement plan, especially regarding catch-up contributions.
Increased Catch-Up Contributions for Ages 60-63
From 2025 onward, if you’re aged 60 to 63, you’ll see an increase in the maximum catch-up contribution for 401(k), 403(b), and 457(b) plans. The limit will be the greater of $10,000 (adjusted for inflation) or 150% of the 2024 regular catch-up limit. For SIMPLE IRA participants, this limit will be the greater of $5,000 or 150% of the 2025 regular catch-up limit. This is a great opportunity to boost your retirement savings.
These rule changes are only for those who turn 60, 61, 62, or 63 during the year in question. If you’re 50 or older but not in this age range, the regular catch-up limits apply, which are $7,500 and $3,500 (for SIMPLE IRAs).
Why this matters:
The Roth account change, though delayed, will eventually affect how high-earning individuals can make catch-up contributions. If your plan doesn’t currently offer a Roth option, you may need to amend it to enable these contributions.
Next Steps:
For 2024 and 2025, the current rules remain, allowing standard catch-up contributions for those aged 50 and over. It’s a good idea to start planning for these SECURE 2.0 changes now, especially if you manage a 401(k) plan for employees. Understanding these updates and preparing in advance will help ensure smooth compliance and optimal retirement planning.
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