Whether retirement is right around the corner or you’re still in the process of planning as bright a financial future as possible, understanding how to make the most of your money is crucial. Navigating important changes to applicable laws and regulations is naturally a huge part of that.
First passed in 2022, Secure Act 2.0 is a federal law that helps Americans save more for retirement and maximize the retirement savings they already have. It accomplishes this by encouraging employees to contribute to retirement plans (and employers to offer them in the first place) via automatic enrollment, tax credits, catch-up contributions, and more.
That said, brand-new 2025 tax changes to Secure Act catch-up contribution limits could significantly impact your ongoing financial strategy, especially those at or near age 60, 61, 62, and 63. Here’s a closer look at what you should know.
New Catch-Up Contribution Limit in 2025
If you’re aged 60-63 in 2025, this year’s new catch-up contribution limits could provide a unique opportunity to maximize your retirement savings. Here’s a brief rundown of what’s changing and how:
- Starting in 2025, eligible individuals (ages 60-63) have an opportunity to contribute more to their 401(k), 403(b), or government 457(b) plans.
- These higher catch-up contribution limits apply to eligible plans for which the employer has chosen to adopt this exciting feature.
Under the old set of rules, individuals 50 or older could save up to an additional $7,500 annually via catch-up contributions. The new Secure Act changes raise this limit to a potential $10,000-11,250 for those aged 60, 61, 62, and 63.
How Super Catch-Up Contributions Are Calculated
New limits for eligible individuals on qualifying plans will either be 150 percent of their base limit or $10,000 – whichever amount is greater. Let’s go over a simple method for accurate catch-up limit determination under the 2025 changes to Secure Act 2.0.
The standard catch-up contribution limit is $7,500 for individuals aged 50 or older in 2024. However, the current super catch-up contribution limit is stated as 150 percent of the base contribution amount.
You can calculate an example of this by multiplying $7,500 (the standard limit) by 150 percent. The result is $11,250. (It’s also worth noting that these amounts are not subject to 415 limits.)
Do you qualify for the enhanced super catch-up contribution?
Not sure whether you’ll qualify for these new limits? Consider whether you meet the following qualification criteria:
- You will reach age 60, 61, 62, or 63 by the conclusion of the calendar year 2025.
- You already contribute the maximum deferral amount to your existing retirement account.
If you are 64 or older, your contribution limits revert to the standard specified amounts for those 50 and older.
Similar changes to Roth contribution limits are also in the works. However, necessary modifications to payroll systems and software have delayed these shifts, so they won’t officially take effect until 2026. When those changes do roll out, they will apply to individuals earning $145,000 annually or higher.
What Does Secure Act 2.0 Mean for You?
So what do these new contribution limits mean for you as someone interested in making the most of your retirement savings? Let’s break down some of the most important ways you can leverage this opportunity and reinforce your financial foundation.
If you’re currently 60-63
This is naturally the group in the best position to take full advantage of a hefty super catch-up contribution. You’ve got a very generous additional $3,750 (or more) to work with while you remain eligible. Now is the time to leverage this to close existing gaps in your financial planning strategy, take advantage of any employer-matching contributions available to you, etc.
If you’re approaching 60
If you’re not 60 yet but will be very soon, this is a terrific opportunity to reinforce your retirement planning strategy ahead of schedule. Go over your existing plans now and make any necessary adjustments that can help you best take advantage of higher contribution limits once they are available to you. An experienced financial planner can help take the guesswork out of the process.
If you’re out well outside the 60-63 age range
Even though this particular round of Secure Act 2.0 changes won’t directly affect you, they should still serve as an important reminder to stay in the know. Actively keep in step with applicable contribution limits and embrace additional ways to maximize your savings to stay on track. Stay proactive regarding emerging trends and future regulation changes, as well.
Stay Ahead of Financial Changes with MyStages®
This latest round of new Secure Act catch-up contribution limits is just one example of regulatory changes that can impact your financial plans for retirement in a heartbeat. The world of finance is constantly evolving, and new opportunities to build a stronger financial foundation for yourself and your loved ones can emerge anytime as a result.
An experienced financial advisor can help you stay ahead of the game by identifying golden opportunities, navigating risk, making the most of your existing resources, and more. At MyStages®, you’ll meet some of the best and brightest, each one capable of offering superior financial support at every phase of life.
Ready to explore how professional financial advisory can change the big picture for your financial journey? Start planning for the success and security you deserve by contacting a financial advisor at MyStages® today!
