The 401(k) catch-up contribution limit for workers ages 60 to 63 will increase to $11,250 in 2025, bringing their total deferral limit to $34,750. This change offers additional savings opportunities for older workers. Experts advise taking action now to adjust contributions and maximize benefits.
For 2025, you can defer up to $23,500 into 401 plans, up from $23,000 in 2024, and workers age 50 and older can save an extra $7,500.
But starting next year, the catch-up contribution for workers ages 60 to 63 will rise to $11,250, which brings their total deferral limit to $34,750." opportunity for 401 catch-up contributions for a subset of savers, according to Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
"Probably no one knows about the extra increase," and it could take time before the general public is aware of the new opportunity, said Boston-area CFP and enrolled agent Catherine Valega, founder of Green Bee Advisory.If you plan to adjust 401 deferrals for 2025, "now is the time to be doing it," Valega said.
Typically, it takes a couple of pay periods for 401 contribution changes to go into effect, and you could miss some higher contributions in January by waiting, she said. If you miss bigger deposits early, you can still max out your plan by boosting deferrals later in the year. But higher percentages can "impact cash flow more than people are typically willing to do," Valega said."It's already set for next year," he said. "We're on pace, starting with the first payroll."in 2023, according to Vanguard's 2024 How America Saves report, based on data from 1,500 qualified plans and nearly five million participants.
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