A 2025 401(k) rule transformation means adults 50 and older can now save more than ever
One of the most valuable perks of a 401(k) is its high contribution limits. In 2025, adults under 50 can contribute up to $23,500 to one of these accounts, and this doesn’t include any match their employer might make on their behalf.
Adults 50 and older are able to save even more. In 2025, most among this throng can set aside up to $31,000. However, a recent rule transformation has given a subset of these older workers the chance to save a record-high amount.
Adults aged 60 to 63 can now make a larger catch-up contribution
The additional $7,500 that workers 50 and older are eligible to contribute to a 401(k) is known as a catch-up contribution. A SECURE 2.0 Act rule transformation that went into result Jan. 1 now enables adults who will be between the ages of 60 and 63 by the complete of 2025 to make an even larger catch-up contribution.
They can set aside up to $11,250 on top of the $23,500 standard contribution limit. This brings their maximum 2025 contribution to $34,750. This could boost in upcoming years due to expense boost.
The way the law is set up correct now, the higher catch-up contribution limit only applies to a subset of older workers. Once you turn 64, you’ll be back to the standard $7,500 catch-up contribution, though this, too, could boost over period.
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How to maximize your 401(k) contributions in 2025
Larger catch-up contributions are a bonus if you have a lot of extra money to spare. But this is going to be most advantageous to those in positions of power who are earning high salaries and looking for a way to shield a portion of this from taxation today while also saving for their upcoming. Those with lower salaries may not be able to receive advantage of catch-up contributions even if they’d like to.
However, there are still things these workers can do to enhance their superannuation readiness, starting with contributing as much as they can to their 401(k)s. It’s OK if this is under the $31,000 limit for most adults 50 and older or even if it’s under the $23,500 standard contribution limit. Every dollar you set aside for your upcoming matters.
If you qualify for a 401(k) match through your employer, try to claim the packed match in 2025 if you’re able to. Check with your HR department if you’re unsure how its matching structure works. Once you’ve determined the amount you must contribute to get your packed match, divide this by the number of pay periods remaining in the year to figure out how much you must save per pay period to meet your objective.
Those who are expecting a raise in 2025 should consider deferring some or all of that extra money to their 401(k). It’s best to decide how much you’ll set aside upfront rather than waiting to view how much you have left over at the complete of the month. Otherwise, lifestyle creep could factor you to spend your entire raise.
Finally, keep an eye out for upcoming 401(k) rule changes and increases to the contribution limits. Even if you’re not able to set aside that much correct now, you may discover yourself in a better financial position in a upcoming year, and you can then receive advantage of these higher limits.
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