Retirement investment planning is all about making the most of your savings opportunities, and a new rule under the SECURE 2.0 Act of 2022 is set to provide just that. Beginning in 2025, individuals aged 60 to 63 will be eligible for higher catch-up contributions, helping them bolster their retirement nest egg as they approach their golden years.

What’s Changing?

Currently, catch-up contributions allow individuals aged 50 and older to contribute extra funds to their retirement plans beyond the standard limits. Starting January 1, 2025, workers aged 60 to 63 will have an even greater opportunity to save. Under this provision, the catch-up contribution limit will be the greater of:

  • $10,000
  • 150% of the standard catch-up contribution limit for the year

For example, in 2025, the standard catch-up contribution limit is expected to be $7,500, which means eligible individuals could contribute up to $11,250, giving them a significant boost as they near retirement.

Key Considerations

  • Payroll Adjustments: Since employee contribution limits are typically managed through payroll, it’s important to check with your payroll provider to ensure the new limits are implemented correctly.
  • Plan Adoption: Employers can choose whether to adopt this provision. If your plan already allows standard catch-up contributions, it will be assumed that you want to adopt the new enhanced catch-up contributions unless you notify otherwise.

What This Means for You

If you’re between the ages of 60 and 63 in 2025, this is an excellent opportunity to accelerate your retirement savings. Taking advantage of this increased limit can provide greater financial security and flexibility in retirement.

As always, if you have questions about your retirement plan or how these changes impact you, feel free to reach out. Planning ahead is key, and this new provision can help ensure you’re on the right track.

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