If you’re age 50 or older, hopefully you already know that 401k and 403b plans allow you to contribute more than the standard “elective deferral” amount that applies to all workers, called the “catch-up” contribution. For 2025, the standard contribution limit for everyone (with exceptions for certain “highly compensated employees”), is $23,500 with the catch-up contribution staying at $7,500 UNLESS you will be age 60, 61, 62 or 63 by the end of 2025.
If you fall in that range of age 60 – 63, then according to the SECURE 2.0 Act, you can save even more beyond those limits; the catch-up amount for folks who are eligible to put the maximum standard contribution amount in is $11,250, meaning if you’re in that range, you can contribute up to a total of $34,750 into your 401k or 403b in 2025.
Making the most of your catch-up amount
Keep in mind that the catch-up contribution amount is often a separate election from your standard deferral amount, which means you may need to log in to your 401k or 403b account and update the amount you’ve elected as a catch-up to adjust for the higher limit. Most plans allow you to set a per-paycheck or annual dollar amount for your catch-up, while the standard contribution, which would apply to anyone eligible for the plan, is typically a percentage of your pay.
Anytime the catch-up contribution amount goes up, assuming you wish to put that maximum amount into your retirement account, you likely need to log in and increase how much you’re adding.
Interestingly, the law only allows these enhanced catch-up amounts until you’re 64, when you’ll have to drop back to the standard catch-up amount, which for 2024 and 2025 is $7,500.
It’s important to note that these amounts are not prorated if you age into or out of the applicable age ranges during the year; what matters is your age on the last day of the year. So if you’re turning 60 in 2025, you’ll be eligible for that full $11,250 enhanced amount. Alternatively, if 2025 is when you’ll turn 64 (cue the Beatles song!), you’ll be limited to $7,500 for the entire year. Catch-up amounts have always worked this way.
2025 Enhanced Contribution Amounts
The bottom line is, if you’re in that final push to save for retirement or you’re looking for additional ways to reduce your taxable income, it’s important to stay on top of your catch-up contributions once you’re age 50 and older to ensure you’re always putting the max away. The universal catch-up amount of $7,500 hasn’t increased since 2023, but if you haven’t checked in on that since then, you could be still contributing at the 2022 limit of $6,500 or less.
Not sure if you should be increasing your catch-up contributions, or wondering if you should elect pre-tax or Roth when making this election? We’d love to help! Reach out to schedule a call with us today so we can help you ensure you’re optimizing your retirement and tax savings opportunities, no matter what age you are.