As you kick off 2025 with fresh goals and plans, there’s exciting news for those approaching retirement. New legislation offers a unique opportunity for individuals aged 60-63 to supercharge their 401(k) contributions and set themselves up for a more secure retirement.

Even if you’re not in this age group, knowing about this change can help you or someone you care about make informed decisions. Let’s dive into the details and explore how you can make the most of this opportunity.

Key Takeaways

1. New Catch-Up Contribution Limit (Effective 2025):
   • If you’re aged 60-63, you can contribute an additional $11,250 to your 401(k) annually.
   • This is significantly higher than the standard catch-up contribution of $7,500 available for those aged 50+.
2. Increased Regular Contribution Limit:
   • The annual contribution limit for 401(k)s has increased to $23,500, allowing you to save even more.
3. Changes Coming in 2026:
   • Starting in 2026, individuals earning more than $145,000 will be required to make all catch-up contributions to a Roth (after-tax) account instead of pre-tax.

What Does This Mean for You?

If you’re nearing retirement and fall into the 60-63 age range, this new legislation offers a powerful way to boost your retirement savings. Whether you’re looking to maximize tax-advantaged growth or simply want to accelerate your financial readiness for retirement, this increased catch-up limit could make a big impact.

However, the upcoming 2026 rule change introduces an income limitation for pre-tax catch-up contributions. If you earn more than $145,000, your additional contributions will need to go into a Roth account. This could have implications for your overall tax planning strategy, so it’s important to stay ahead of these changes.

Next Steps

• For 2025: If you’re in the 60-63 age bracket, consider increasing your 401(k) contributions to take advantage of the new limit.
• For 2026: Keep an eye on your income level if you’re planning to make catch-up contributions, and be prepared to adjust your strategy based on Roth requirements.

Planning for retirement is all about maximizing opportunities like these to secure your financial future. Whether you’re gearing up for retirement yourself or know someone who is, this new catch-up contribution rule offers a chance to make a significant impact on long-term savings.

If you’d like help analyzing how this change fits into your financial plan, reach out to us. We’re here to help you navigate the nuances and ensure you’re set up for success.

Here’s to making 2025 your best financial year yet!