2025 401(k) Contributions Limits and New ‘Super Catch-up’ Rule

For decades, 401(k) plans and other defined contribution workplace plans have served as primary channels for long-term investing. Many of you currently contribute, or have contributed to these plans in the past, with the aim of securing your financial future. Recently, the IRS rolled out some exciting adjustments to 401(k) contributions for 2025, and we are eager to share them with you!

Let’s take a look at current contribution limits. As of 2024, you can contribute a maximum of $23,000 to your 401(k). For those of you over the age of 50, an additional $7,500 can be added as a catch-up contribution, increasing your total limit to $30,500. This benefit is intended to help workers closer to retirement age who would like to “catch up” on their savings.

For 2025, you will notice adjustments to the 401(k) contribution limits. The employee contribution limit increases modestly from $23,000 to $23,500. For those over age 50, the catch-up contribution remains the same at $7,500.

However, the most significant change is for Individuals ages 60 to 63. If you are in this age range, you can utilize a new ‘super catch-up’ rule. Instead of being limited to $7,500 in catch-up contributions, you will be able to contribute $11,250 (an increase of $3,750!)

For those of you in this specific age range, the new super catch-up rule presents the opportunity to increase your tax-advantaged retirement savings. 

Key Points of the New Super Catch-Up Rule

• Eligibility: To qualify, you must be 60, 61, 62, or 63 at the end of the calendar year.
  For Example, if John is 59 and turns 60 on December 31st, 2025. John is eligible to make a super catch-up contribution in 2025.
• Roth Contribution Requirement for High Earners: Starting in 2026, if a plan participant’s wages exceed $145,000 in the previous year (subject to Cost of living adjustments), the catch-up contribution MUST be made as an after-tax Roth Contribution.
• Extension to Other Plans: This rule also applies to 403(b) plans and governmental 457(b) plans. Participants of these plans who meet the age requirement are eligible.
• Employer Adoption: Implementing the Super Catch-up Rule is optional for employers, so you will need to confirm with your plan sponsor whether this option will be available for you

The adjustments to contribution limits and the new super catch-up rule present a unique opportunity to maximize retirement savings, especially if you are within the specific age range. We highly encourage those of you who are eligible to consider this benefit!

As always, do not hesitate to reach out if you have any questions.

Sources:

https://www.kiplinger.com/taxes/super-catch-up-contribution-for-age-60-63

https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000

https://www.wsj.com/personal-finance/retirement/401k-retirement-account-catch-up-limit-2025-5ed60a7b?mod=hp_lead_pos8