Enhanced Catch-Up Contribution Limits for Ages 60-63 Starting in 2025

The SECURE 2.0 Act brings significant changes to retirement planning, particularly for individuals aged 60 to 63. These changes aim to help workers boost their retirement savings during critical pre-retirement years. Let’s explore what’s new for Solo 401(k) and SIMPLE plan participants starting in 2025.

‍

Higher Catch-Up Limits for Solo 401(k) Plans

The SECURE 2.0 Act introduces an enhanced catch-up contribution limit for individuals participating in 401(k), 403(b), and governmental 457(b) plans. Currently, participants aged 50 and older can contribute an additional $7,500 annually. Starting in 2025, those aged 60 to 63 can contribute up to $11,250 in catch-up contributions annually. This is a significant boost, allowing a total contribution of up to $34,750 when combined with the regular contribution limit of $23,500.

‍

Updates for SIMPLE 401(k) and SIMPLE IRA Plans

SIMPLE plan participants will also see higher contribution opportunities. The standard catch-up contribution limit for individuals aged 50 and over remains $3,500. However, starting in 2025, participants aged 60 to 63 can make enhanced catch-up contributions of up to $5,250. With the increased standard contribution limit of $16,500 for SIMPLE plans, individuals in this age group can save up to $21,750 annually.

‍

Roth Requirement for Higher Earners

Beginning in 2026, high earners will face an additional change. If your prior-year wages exceed $145,000, any catch-up contributions must be made on a Roth basis. This means the contributions will be made with after-tax dollars, potentially impacting tax planning strategies. It’s crucial for participants to review their financial plans and adjust accordingly.

‍

Employer Adoption and Next Steps

While these enhanced limits provide new opportunities, their implementation depends on employer adoption. Not all employers may offer these increased catch-up options, so it’s essential for participants to confirm availability with their plan administrators.

‍

Planning Ahead

These changes present a valuable opportunity for individuals nearing retirement to maximize their savings. By understanding the new limits and adjusting contributions accordingly, participants can take full advantage of these enhancements. With proper planning, these increased limits can help individuals strengthen their retirement nest egg during these critical years.

For official information on contribution limits, visit IRS.gov.  To see the 2025 contribution limits, click here.