Have you ever said, or hear others say, “If I’d only started saving sooner…”? Many of us have. In most cases, life got in the way even though we intended to build our nest eggs. Or maybe it was fluctuations in the economy or the bad luck of being underemployed for too many years.

Now there is no reason to lament. The government is giving people in specific age brackets the opportunity to make up for lost time. We hope you will take full advantage of this rare “do over” for yourself. Moreover, if you are a plan sponsor, this may affect you. Below are more details.

Effective January 1, 2025, participants ages 60-63 will have the opportunity to take advantage of additional contributions through their 401(k), 403(b), and 457(b) plans as part of the SECURE 2.0 increased Catch-Up Limit. Prior to this date, participants ages 50 and over have been eligible for additional catch-up limits of $7,500 (2024 limit).

Starting in 2025, participants who have reached age 50 may still take advantage of the existing catch-up limit, but for those participants who reach ages 60, 61, 62, or 63 by the end of the calendar year, they may use an alternate increased amount – the greater of $10,000 or 150% of the age 50 and over catch-up limit for that year.

If your plan already offers age 50 and over catch-up, then it is mandatory that you comply with this new provision. Plan sponsors should investigate whether they need to build a new deduction code in their system or notify their payroll provider.

Please note the increased Catch-Up Contribution will need to be discontinued and revert only to the standard age 50 and over catch-up for the calendar year in which the participant will reach age 64 and beyond.

There is no formal approved SECURE 2.0 amendment for this plan provision at this time. However, the amendment should be prepared and signed by December 31, 2026 once available.

Illustration:

Assume an age 50 and over catch-up limit of $7,500 and standard DC contribution limit of $23,500 in 2025: