New Age 60 – 63 401(k) Enhanced Catch-up Contribution Starting in 2025

Good news for 401(k) and 403(b) plan participants turning age 60 – 63 starting in 2025: there is now an enhanced employee catch-up contribution thanks to Secure Act 2.0 that passed back in 2022.  For 2025, the employee contributions limits are as follows:

Employee Deferral Limit:            $23,500

Age 50+ Catch-up:                         $7,500

New Age 60 – 63 Catch-up:        $3,750

401K Age 60 – 63 Catch-up Contribution

Under the old rules, in 2025, a 401(k) plan participant age 60 – 63 would have been limited to the employee deferral limit of $23,500 plus the age 50+ catch-up of $7,500 for a total employee contribution of $31,000.

However, thanks to the passing of the Secure Act in 2022, an additional catch-up contribution will be introduced to employer-sponsored qualified retirement plans, only available to employees age 60 – 63, equal to “50% of the regular catch-up contribution for that plan year”.   In 2025, the catch-up contribution is $7,500, making the additional catch-up contribution for employees age 60 – 63 $3,750 ($7,500 x 50%).  Thus, a plan participant age 60 – 63 would be able to contribute the regular employee deferral limit of $23,500, plus the normal age 50+ catch-up of $7,500, PLUS the new age 60 – 63 catch-up contribution of $3,750, for a total employee contribution of $34,750 in 2025.

Age 64 – Revert Back To Normal 401(k) Catch-up Limit

This is a very odd way to assess a special catch-up contribution because it is ONLY available to employees between the ages of 60 and 63.  In the year the 401(k) plan participant obtains age 64, the new additional age 60 – 63 contribution is completely eliminated.  Here is a quick list of the contribution limits for 2025 based on an employee’s age:

Under Age 50:   $23,500

Age 50 – 59:       $31,000

Age 60 – 63:       $34,750

Age 64+:              $31,000

The Year The Employee OBTAINS Age 60 – 63

The employee just has to OBTAIN age 60 – 63 during that year to be eligible for the enhanced catch-up contribution. The enhanced catch-up contribution is not pro-rated based on WHEN the employee turns age 60.  For example, if an employee turns 60 on December 31st, they are eligible to make the full $3,750 additional catch-up contribution for the year.

By that same token, if the employee turns age 64 by December 31st, they are no longer allowed to make the new enhanced catch-up contribution for that year.

Optional Provision At The Plan Level

The new 60 – 63 enhanced catch-up contribution is an OPTIONAL provision for qualified retirement plans, meaning some employers may allow this new enhanced catch-up contribution while others may not.   If no action is taken by the employer sponsoring the plan, be default, the new age 60 – 63 catch-up contributions starting in 2025 will be allowed. 

If an employer prefers to opt out of allowing employees ages 60 – 63 from making this new enhanced catch-up contribution, they will need to contact their TPA firm (third-party administrator) as soon as possible to amend their plan to disallow this new type of employee contributions starting in 2025.  

Contact Payroll Company

Since this a brand new 401(k) employee contribution starting in 2025, we strongly recommend that plan sponsors reach out to their payroll company to make sure they are aware that your plan will either ALLOW or NOT ALLOW this new age 60 – 63 catch-up contribution, so the payroll system doesn’t incorrectly cap employees age 60 – 63 from making the additional catch-up contribution.

Formula: 50% of Normal Catch-up Contribution

For future years, the formula for this age 60 – 63 enhanced catch-up contribution is 50% of the regular catch-up contribution limit. The IRS usually announces the updated 401(k) contribution limits in either October or November of each year for the following calendar year.  For example, if the IRS announces that the new catch-up limit in 2026 is $8,000, the enhanced age 60 – 63 catch-up contribution would be $4,000 over the regular $8,000 catch-up limit.

About Michael……...

Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.

Frequently Asked Questions (FAQs):

What is the new 401(k) and 403(b) age 60–63 catch-up contribution for 2025?
Starting in 2025, employees aged 60–63 can contribute an extra “enhanced” catch-up contribution to their 401(k) or 403(b) plan. This new contribution equals 50% of the standard catch-up contribution for that year. For 2025, that means an additional $3,750 on top of the normal catch-up limit.

How much can employees aged 60–63 contribute to a 401(k) in 2025?
For 2025, employees aged 60–63 can contribute:

• Regular employee deferral: $23,500

• Standard age 50+ catch-up: $7,500

• New age 60–63 catch-up: $3,750
  Total: $34,750

What happens when an employee turns 64?
The new enhanced catch-up contribution is only available through age 63. In the year an employee turns 64, they revert back to the standard catch-up limit of $7,500, for a total maximum contribution of $31,000 in 2025.

Do employees need to be 60 for the full year to qualify?
No. The employee only needs to obtain age 60–63 during the tax year to be eligible. Even if they turn 60 on December 31, they qualify for the full additional $3,750 catch-up contribution for that year.

Is the new 60–63 catch-up contribution mandatory for employers?
No. The provision is optional. Employers must decide whether to allow the new enhanced catch-up contribution in their retirement plan. If an employer takes no action, the new contribution will automatically be allowed starting in 2025.

Should employers notify their payroll company?
Yes. Plan sponsors should confirm with their payroll provider whether their plan will allow the new 60–63 catch-up contributions. Payroll systems will need to be updated to ensure eligible employees can contribute correctly.

How will future enhanced catch-up amounts be calculated?
Each year, the enhanced age 60–63 catch-up limit will equal 50% of that year’s regular catch-up contribution. For example, if the standard catch-up limit rises to $8,000 in 2026, the new enhanced catch-up would be $4,000.