If you’re closing in on retirement and wish you could save a little more toward your retirement goal, you’re in luck. Beginning in 2025, anyone age 60-63 who participates in a 401(k), 403(b) or government 457(b) plan will be able to super-size their catch-up contribution. Additionally, contributing more could lower your taxable income and potentially reduce your overall tax liability.
Originally, catch-up contributions were designed to give workers age 50 and up the ability to save more for retirement and “catch up” for years when saving may not have been an option.
In 2024, the catch-up contribution for those 50 and older in 401(k) plans was $7,500. For 2025, the standard catch-up contribution remains at $7,500, but for people age 60-63 the maximum catch-up is $11,250. With the enhanced catch-up contribution, a participant can contribute $23,500 to their account plus $11,250 for a total contribution of $34,750.
Whether to allow super-sized catch-up contributions in a 401(k) plan is entirely up to the employer. Although allowed by the IRS, it is optional for the employer.
This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products. None of the information herein constitutes an investment recommendation, investment advice or an investment outlook. The opinions and conclusions contained in this report are those of the individual expressing those opinions. This information is non-tailored, non-specific information presented without regard for individual investment preferences or risk parameters. Some investments are not suitable for all investors, all investments entail risk and there can be no assurance that any investment strategy will be successful. This information is based on sources believed to be reliable and Alhambra is not responsible for errors, inaccuracies, or omissions of information. For more information contact Alhambra Investment Partners at 1-888-777-0970 or email us at [email protected].
