If you’re living in the United States and are looking forward to retirement, you may want to be aware of important changes in the rules and regulations for retirement accounts that recently came into effect.
On Dec. 29, 2022, the SECURE 2.0 act was enacted and designed to encourage and stimulate retirement saving for investors nationwide by expanding the functionality of employer-sponsored retirement plans, like 401(k)s and 403(b)s.
We’re breaking down a few of the important features from that act that have become effective as of 2025. We’re also providing some simple examples so you can gain greater clarity on if and how implementing these changes into your retirement planning strategy will benefit you.
In Part I of this article series, we covered the new Retirement Plan Auto-Enrollment feature that applies to newer retirement accounts.
In Part II, we’ll be covering the “boosted” or “super” catch-up contribution allowance that went into effect at the start of this year. So, let’s find out how this new provision gives late-career workers an extra opportunity to bolster their retirement savings.
What Are Catch-Up Contributions?
Before we get into “super” catch-up contributions, a brief refresher on what a catch-up contribution is as it relates to retirement savings accounts is in order. Simply put: Catch-up contributions are extra contributions that individuals ages 50 and over can make into their retirement accounts.
If you’d like to take a deeper dive into the types of accounts catch-up contributions apply to and how to make catch-up contributions, you can give this article a read: Catch-up Contributions – Supercharging Age 50+ers Retirement Plan. But here’s a quick example:
- In 2025, the standard contribution an employee can make to their 401(k) is $23,500.
- In 2025, the catch-up contribution limit for an employee contributing to their 401(k) is $7,500.
- For someone aged 50+ in 2025 participating in a 401(k), this means the maximum contribution opportunity for the year is $31,000.
Now let’s boost these catch-ups for a few years.
What Are Super Catch-Up Contributions?
Now we get into what’s new under the SECURE 2.0 act. The feature of the act relating to catch-up contributions gives employees aged 60-63 an extra opportunity to bolster their retirement savings as they approach that critical milestone in life. So how does it work?
For those who fall in this age range, the act states that they can contribute an amount that is the greater of $10,000 or 150% of the standard catch-up limit. As opposed to a fixed number, it’s stated this way because the standard catch-up contribution limit will periodically increase to account for inflation, and then so will the super catch-up limit as well.
Using 2025’s numbers, let’s look at an example to see how this works.
Test Case: Elizabeth, Age 62
Elizabeth is a 62-year-old nurse who earns $105,000 a year and participates in her employer’s 403(b) plan.
For 2025:
- She contributes the maximum standard allowance for all retirement plan participants of $23,500.
- She contributes the maximum standard catch-up contribution allowance for those aged 50+ of $7,500.
- Since she’s in the 60-63 age range, she takes advantage of the super catch-up feature and contributes the maximum 150% of the $7,500 standard catch-up limit to bring her total catch-up contribution to $11,250.
This means that her 2025 total pre-tax contribution to her retirement plan is $34,750 ($23,500 + $11,250). If she takes advantage of this provision all four allowable years, from ages 60-63, she’ll have an extra $16,000 or more to invest in her retirement. Assuming she won’t need to access these funds until the back end of her retirement years, that extra sum earning interest can really add up over the course of her remaining years.
Key Notes About the Super Catch-up Provision
- It’s not mandatory at the time for employers to allow catch-up contributions as part of the retirement plan they sponsor. That relates to any catch-up contributions at all, not just these “super” catch-ups. If an employer does offer catch-up contributions within their plan, the SECURE 2.0 act simply gives them the option to amend their plan so as to add the “super” catch-up feature. Be sure to check with your HR or plan admin to find out the catch-up features, if any, included in your employer’s plan.
- While IRAs do also have a catch-up contribution allowance for those ages 50+ ($1,000 in 2025, bringing the total allowable contribution to an IRA to $8,000 for the year), the “super” catch-up provision does not apply to them. This SECURE 2.0 act feature is specific to 401(k)s, 403(b)s, and government 457(b)s.
Who Benefits from Super Catch-Up Contributions?
Of course, anyone in the age 60-63 range will benefit from taking advantage of this new feature, if they have the situation to do so. However, this new rule will especially provide a benefit for a few specific groups:
Late-Career Professionals
Generally, those at the latter stage of their career are in their highest earning years. This means they’re also in their peak tax liability years. Taking advantage of the super catch-up contribution provision allows these professionals to channel more of their higher-taxed money into pre-tax savings. Then, when they’ve retired and have a lesser tax liability, they can draw on this money. In short, they keep more of the money they worked hard for.
Workers with Savings Gaps
At different periods in life, many people will have gaps in their ability to save. This may be due to taking time off to raise a family, pursue higher education, or simply because of experiencing an unexpected setback like a loss of job or severe sickness. This new provision allows such ones to play catch-up a little bit more effectively to partially cover for a year or two with a savings gap.
Entrepreneurs
Those who went into self-employment as small business owners often had to delay saving for retirement to invest in their business. If you’re wondering how a self-employed individual can benefit from an employer-sponsored plan, that’s where the Solo 401(k) comes into play.
Women
In view of historical pay gaps and the higher likelihood that they’ve had the role of caregiving responsibilities, this provision can especially benefit women.
The above examples illustrate clearly why these later-year retirement savings boosts earned the name “catch-up contributions.”
Don’t Put off Saving for Retirement
Being as it is that this provision has a small window of applicability – only ages 60-63 – this is definitely information you don’t want to miss out on. If you’re already in the 60-63 age range and can put away this extra chunk towards your nearing retirement, you’ll want to implement that sooner than later.
If you’re under 60 but nearing that age, having this information at hand allows you to adjust your savings projections with a view to retirement. Shortly before you hit 60, be sure to check what the current catch-up contribution limit is at in that year. There’s a good chance it will have increased by then.
If you’re over 60, I’m sorry to say that the boosted catch-up contribution provision isn’t one you can take advantage of. However, you can continue to make the standard + catch-up contributions available to all age 50+ers. This as long as you are earning income and that income is equal to or greater than the contribution limits.
Are you or a loved one nearing retirement? Would you like guidance in ensuring the money you’ve worked hard for continues to work hard for you? Would you like a retirement roadmap to provide a visual lifetime retirement income plan that minimizes taxes? If so, you can book a no-obligation call with a retirement planning professional and get the clarity and peace of mind that comes with knowing you’ll be well-provided for in the later chapters of your life.
Let’s Have a Conversation:
Are you managing to advance your retirement savings? Have you done super catch-up contributions? What do you still need to know pre-retirement?
