If you work for an employer that sponsors a 401(k) or a governmental agency that offers
457(b) plans, you might already know about catchup contributions.
For a while, employers sponsoring these plans can give participants who are 50 or older
by the end of the calendar year a chance to make catchup contributions to boost their
retirement accounts.
They don’t have to offer catchup contributions, but many do.
In 2024, the maximum allowed catchup contribution was $7500 but in 2025, the
SECURE 2.0 act of 2022 is allowing those contributions to increase for some
participants.
For participants who will be 60, 61, 62 or 63 by the end of the calendar year, a larger
limit will be allowed. The larger amount, which is $10,000 or a percentage more than the
2024 limit will be allowed. If participants are older than 64, the under 50 limit applies.
Since employers don’t have to offer catchup contributions, it’s not known whether
employers will allow participants to make the additional contributions; however, that
guidance from the federal government could be coming. We just don’t know today.
SECURE is aimed at improving the retirement system and making more of a financial
contribution will do that. We just won’t know the impact for several years, as the
changes are still continuing to roll out.
It is important for employers and participants to keep up on the changes and discuss
with a financial professional if there are questions or concerns. As we head into the
future, staying informed is key! We will continue to stay on top of it for you, sharing
information and details.
Do you still have questions about retirement planning options? Follow us on LinkedIn and Facebook!
You can also email us or call 937.308.0758.
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