The US government has introduced ‘super’ 401(k) catch-up contributions to allow older American workers to sock away more for retirement — here’s how they’ll work in 2025

If you're between 60 and 63 years old, the IRS has some good news for you: you'll soon be able to save more for retirement.

The IRS announced an increase to the catch-up limit for contributions to employer-sponsored retirement plans such as 401(k)s, nearly doubling the standard catch-up amount for individuals aged 50 and older.

Don't miss

Undervalued commercial properties are giving investors the upper hand on the stock market at last - here's how shrewd investors can tap into this trend.
Auto insurance premiums in the US are skyrocketing – and unfortunately, there's no end in sight. However, in less than two minutes, you can potentially save hundreds, if not thousands, of dollars a year on your policy just by implementing some simple tips and strategies.
(There is no text provided for me to paraphrase. Please provide the text you'd like me to paraphrase.)

It can be invigorating to contribute extra pre-tax dollars towards your retirement savings. Yet, there's a growing concern that it may not benefit everyone equally.

Catch-up contributions involve making payments to an individual's retirement plans, such as a 401(k), 403(b), or an IRA, with pre-tax dollars. This can provide a benefit for individuals who are contributing to their plan in the following year, reducing their taxable income for that year. Contributions can be made to the individual's plan, spouse's plan, and the plans of eligible domestic partners and their dependents. This type of contribution allows individuals to reduce their tax bill by taking advantage of their contributions in the same tax year.

Annually, the IRS issues updated information about the maximum amount individuals can contribute to their 401(k) accounts. Apart from the standard amount, those who are 50 years of age or older are eligible to make additional contributions. For the calendar years 2024 and 2025, this extra contribution allowance is $7,500.

As of 2025, thanks to the SECURE 2.0 Act that passed in 2022, individuals aged 60 to 63 will be eligible for a special catch-up contribution of up to $11,250. Specifically, those with qualifying employer-sponsored plans who are within this age range in the calendar year will be able to add an extra $3,750 to their 401(k) accounts.

With this super catch-up contribution, you will be able to set aside a total of $34,750.

The goal of increasing catch-up contribution limits is to assist individuals nearing retirement age in adding more money to their savings before they stop working.

For those Americans who previously couldn't save as much during their earlier working years due to limited income or other essential expenses, such as childcare, it's a particularly favorable prospect.

Take note: this "supercharged" saving option is a limited-time offer. After you turn 64, your limit reverts to the regular annual contribution amount, which is $31,000 in 2025.

The cost-of-living situation in the United States remains unaffordable.

Catch-up contributions pose several significant challenges.

The main issue with this proposed solution is that it doesn't truly help the majority of people.

The extra amount usually helps higher income earners, who already save as much as they can, even if it's not the full maximum, in their 401(k)s. Someone earning a six-figure income might still find that amount takes up over a third of their earnings.

Is that a realistic amount for many people to save? Probably not. Given that many individuals have other major expenses, such as mortgage payments, transportation costs, and daily bills, saving a significant amount may be out of reach for most. Also, nearly 57.2% of workers nearing retirement already contribute to a 401(k), which means a lot of people might not even be taking advantage of catch-up contributions to begin with.

Once you have some extra money saved up, consider boosting your premium payments to lower your overall costs.

Increasing your income, whether through a salary boost from negotiations or a side business, can help you boost your retirement savings. Concentrate on generating more savings or earnings and then set aside a bit more in your 401(k) account over time.

It's never too early or too late to consider making retirement savings a top priority, regardless of your current age.