Older retirement savers could get a bigger boost from super catch-ups

Starting in 2025, workers aged 60 to 63 will have an opportunity to enhance their retirement savings with an expanded “super catch-up” contribution under new rules unveiled by the IRS.

That adjustment, designed to boost the retirement contributions for those nearing retirement age, will enable eligible individuals to add an extra $11,250 per year to their 401(k) accounts, raising their overall annual contribution limit to $34,750.

The super catch-up provision was unveiled as part of a more comprehensive package of inflation adjustments to retirement account contributions that will kick in next year.

As noted in the Wall Street Journal, it would allow 60- to 63-year-old 401(k) savers to bump up their contributions to a level roughly 14 percent higher than in 2024, marking the biggest shift in 401(k) contribution rules in two decades. With the standard 401(k) limit for 2025 projected at $23,500, and the regular catch-up for those 50 and older at $7,500, the super catch-up will represent an additional $3,750 for qualifying participants.

While that higher limit aims to help older Americans fortify their retirement funds, maming the most of that increase will likely be feasible mostly for high earners, including executives and professionals with the financial means to maximize their savings. As a report by MarketWatch notes, workers with salaries above $150,000 and substantial existing 401(k) balances will most likely be the ones to pull that new lever.

Beyond that, adopting the new rule may present some logistical changes for both employers and employees. Based on the documents governing them, only a subset of retirement plans can be expected to accommodate the new contribution limits, and payroll systems must syncronize with retirement-plan administrators to make sure the plan member doesn't get slapped for making excessive contributions. 

For workers interested in the super catch-up, planning ahead will be vital. The rule allows those turning 60 before the end of a tax year to begin contributing at age 59, provided they meet the other requirements. On the flip side, those who turn 64 within the tax year would need to revert to the regular catch-up limits.

The super catch-up contributions can be made to either traditional pretax 401(k) accounts or Roth 401(k) accounts, if the employer offers the option. As with all tax planning decisions, choosing between the two will depend on several factors.

The Journal report focused on how pretax contributions reduce current taxable income, while Roth contributions, which require taxes paid upfront, allow funds to grow tax-free. In 2026, however, super catch-up contributions will be restricted to Roth accounts under a previous rule set out by the IRS, unless the implementation of that rule gets delayed again.