Those just around the corner from retiring will have a way to sock away more money in their nest egg. In 2025, SECURE 2.0 created enhanced catch-up contributions for individuals ages 60 to 63, allowing you to supercharge your savings for retirement.

401k, 403b, and 457 Contribution Limits

Individuals can contribute up to $23,500 (2025) to their 401k, 403b, or 457 plan. Those aged 50 and higher can make an additional catch-up contribution of $7,500.

Confusing new SIMPLE IRA Contribution Limits

The SECURE Act 2.0 introduced a 10% increase in contribution limits for SIMPLE IRAs, effective 2024. This rule applies differently based on the number of employees:

For employers with 25 or fewer eligible employees:

• The employee elective deferral limit is automatically increased by 10%. The catch-up contribution limit for employees aged 50 or older is also increased by 10%.

For employers with 26-100 employees:

• They can opt to offer the 10% increased limits if they provide either:
  • A 4% matching contribution, or
  • A 3% non-elective contribution

For 2025, the base SIMPLE IRA contribution limit is $16,500. With the 10% increase, eligible employees can contribute up to $17,600. Similarly, the catch-up contribution limit for those 50 or older increases from $3,500 to $3,850

Additionally, the SECURE Act 2.0 allows employers to make an extra non-elective contribution of up to 10% of compensation or $5,000 (whichever is less) uniformly to all eligible employees.

Employers must notify participants of these increased contribution limits and amend their plans accordingly.

Leave it to the government to take an easy-to-understand SIMPLE IRA contribution limit and make it confusing. It’s not simple anymore, is it?

Enhanced 401k, 403b, 457 Catch-up contributions 60-63

Under SECURE Act 2.0, beginning in 2025, individuals age 60 to 63 will be eligible for additional optional enhanced catch contributions to their 401(k), 403(b), and governmental 457(b) retirement plans.

This enhanced catch-up contribution limit is $10,000 or 150% of the standard age 50+ catch-up contribution limit, whichever is greater.

For example, the catch-up limit for those age 50+ in 2025 is $7,500. The IRS has just announced that the enhanced catch-up contribution limit for those aged 60-63 will be $11,250.

To qualify for the enhanced catch-up contributions, participants must meet specific criteria:

• Be 60, 61, 62, or 63 by the end of the calendar year
• Generally, the maximum deferral amount must already be contributed.

SIMPLE IRA Enhanced Catch-up contributions 60-63

The SIMPLE IRA limit for this enhanced catch-up is $5,000 or 150% of the standard age 50+ catch-up limit, whichever is greater.

Based on the 2025 catch-up limit of $3,500 ($3,850 if eligible for 10% increase), the enhanced catch-up contribution for those aged 60-63 in 2025 will be at least $5,250 ($5,775 if eligible for 10% increase).

2025 Contribution Summary

How does this enhanced catch-up work?

It’s based on your age as of December 31. For example, if someone is 59 in March but turns 60 in December 2025, they could contribute the enhanced catch-up amount in 2025.

On the flip side, once participants turn 64, even if that is on December 30, 2025, they revert to the standard age 50+ catch-up contribution limit for the year.

Of course, catch-up contributions are optional for employees, and this change is also optional for employers. Each plan sponsor will decide whether to implement this feature in their retirement plans.

Roth catch-up rule for high earners

SECURE 2.0 also includes new provisions regarding Roth contributions. Beginning in 2026, if a retirement plan participant’s wages exceed $145,000 in the previous year (subject to cost-of-living adjustments), they must make catch-up contributions on a Roth basis.

The Roth requirement applies to the existing catch-up contributions for savers 50 and older and the new enhanced catch-up for savers 60 through 63.

Making catch-up contributions on an after-tax Roth basis means paying taxes on your retirement savings now but taking a tax-free distribution in retirement. Traditional 401(k) contributions have tax-deductible contributions but taxable withdrawals in retirement. Whether this is good or bad depends on your current income tax rate versus your projected retirement income tax rate.

The final word

Think of these new retirement contribution changes as an extra boost in your savings journey. These enhanced catch-up contributions give folks aged 60-63 a unique opportunity to supercharge their retirement savings. The key is understanding which options apply to your situation and taking advantage of them if they fit your retirement strategy. Remember, just like building any good habit, the most critical step is to start – and these new rules give you even more tools to build the retirement nest egg you’re aiming for.

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