Beginning January 1, 2025, plan participants between the ages of 60-63 will have the opportunity to contribute more to their 401(k) plans.
The SECURE 2.0 Act, which was passed at the end of 2022, included a provision (section 109) that would increase the catch-up contribution limit for participants that are nearing retirement age.
Under current law, defined contribution retirement plans may allow employees aged 50 and over to make catch-up contributions in excess of the normal contribution limit. For 2024, the catch-up limit for participants aged 50 and over is $7,500. This limit is adjusted annually.
In 2025, SECURE 2.0 increases the catch-up limit for participants aged 60-63 to the greater of $10,000 or 150% of the regular catch-up amount, indexed for inflation. Participants aged 50 and above will still be eligible to make catch-up contributions, but their limit will be lower than those in the 60-63 age bracket.
The ADP TotalSource Retirement Savings Plan will integrate the new catch-up limits automatically, with no action required by you. Actively contributing participants will continue to have 401(k) deductions withheld until they have hit the limit that applies to them based on their age, or until they elect to stop deferring.
If you have additional questions, please contact your dedicated 401(k) Specialist at 844-448-0325.
