Retirement savers, take note—2025 is bringing significant changes to contribution limits, especially for those nearing retirement. These updates, made possible by the SECURE 2.0 law, are designed to help you boost your savings during crucial years. Let’s dive into the details:
401(k) Contributions: More Opportunities for Savers
The standard 401(k) contribution limit is increasing to $23,500, but that’s just the beginning.
If you’re 50 or older, you’re eligible for a $7,500 catch-up contribution.
In addition, a new provision under SECURE 2.0 provides even greater benefits for individuals aged 60, 61, 62, or 63 in 2025. Instead of the $7,500 catch-up, you can contribute up to $11,250 in additional savings!
This higher catch-up limit recognizes that many individuals in this age range are in their peak earning years and may want to accelerate their retirement savings.
Enhanced SIMPLE Plan Contributions
For participants in SIMPLE retirement plans, the base contribution limit rises to $16,500.
For those aged 50 and older, the catch-up contribution is typically $3,500, bringing the total to $20,000.
But if you’re 60, 61, 62, or 63 in 2025, your catch-up amount increases to $5,250—a total contribution potential of $21,750 for the year.
Why This Matters
These newly increased limits are designed to help individuals nearing retirement shore up their financial plans. The years between 60 and 63 are critical for many savers who may be:
Catching up after delays in earlier contributions.
Preparing for retirement within the next decade.
Looking to maximize tax advantages during peak income years.
With these higher contribution limits, you can supercharge your savings and better position yourself for a secure retirement.
What You Should Do Next - Action Items:
Ensure going into 2025 you're maximizing contributions to take advantage of these higher limits.
Communicate any changes to your 2025 contributions to your HR/payroll.
Questions
While the annual limits for retirement savings reflect an inflationary adjustment each year, the age 60-63 higher limits are brand new. Be sure to assess your situation in light of these adjustments. If you have any questions, please contact TrueBlaze Advisors so we can help.