401(k) Catch-Up Contribution FAQs: Your Top Questions Answered (2025 Rules)
Got questions about 401(k) catch-up contributions? You’re not alone. With updated 2025 limits and new Roth rules on the horizon, this article answers the most common questions about who qualifies, how much you can contribute, and what strategic moves to consider in your 50s and early 60s.
As retirement gets closer, many individuals start to wonder how they can supercharge their savings and make up for lost time. For those age 50 and older, catch-up contributions offer a powerful opportunity to contribute more to retirement accounts beyond the standard annual limits. Below, I’ve addressed some of the most common questions I get from clients about catch-up contributions, especially with the updated 2025 rules in play.
Can I make catch-up contributions if I’m working part-time in retirement?
Yes, as long as you have earned income from a job, and you have met the plan’s eligibility requirements. So, even if you’ve scaled back your hours or semi-retired, you may still be eligible to make additional contributions.
For example, if you're age 65 and working part-time and eligible for your company’s 401(k) plan, you can contribute up to $23,500, plus an extra $7,500 in catch-up contributions for a total of $31,000 in 2025, assuming you have at least $31,000 in W2 compensation.
If you have less than $31,000 in W2 comp, you will be capped by the lesser of the annual contribution limit or 100% of your W2 compensation.
Are Roth catch-up contributions allowed?
Yes. If your employer plan offers a Roth option, you can choose to make your catch-up contributions as Roth dollars. This means you contribute after-tax money now and take qualified distributions tax-free in retirement.
This option is popular for individuals who are in the same tax bracket now as they plan to be in retirement. The Roth source also avoids required minimum distributions (RMDs) starting at age 73 or 75.
How do catch-up contributions impact required minimum distributions (RMDs)?
Catch-up contributions themselves don’t change the timing or calculation of RMDs. However, where you put the catch-up dollars can affect your future RMDs. If you contribute catch-up dollars to a Roth 401(k) and then roll over the balance to a Roth IRA prior to the RMD start age, RMDs are not required.
Adding more to the pre-tax employee deferral source within the plan may increase your future RMD requirement since pre-tax retirement accounts are subject to the annual RMD requirement once you reach age 73 (for those born 1951–1959) or 75 (for those born 1960 or later).
Should I prioritize catch-up contributions or pay down my mortgage?
This depends on your interest rate, your retirement timeline, tax bracket, and your overall financial goals. Generally, if your mortgage interest rate is below 4% and you’re behind on retirement savings, catch-up contributions may be a better use of your idle cash, especially if your investments are growing tax-deferred (pre-tax) or tax-free (roth).
However, if you’re already on track for retirement and the psychological benefit of being debt-free is important to you, putting extra cash toward your mortgage can make sense. It’s all about balancing the right financial decision with your personal preferences.
What happens if I forget to update my payroll deferrals after turning 50?
Unfortunately, you won’t automatically get the benefit since your employer’s payroll system won’t adjust your contributions just because you had a birthday. You need to take action and manually increase your deferrals to take advantage of the higher limits.
For example, if you turn 50 this year and forget to bump your 401(k) deferrals, you may miss out on contributing an additional $7,500. Worse yet, once the calendar year closes, you can't go back and make up for it.
Are there additional tax benefits associated with making catch-up contributions?
It’s common that the years leading up to retirement are often the highest income years for an individual. The additional pre-tax contributions associated with the catch-up contribution allow employees to take more of their income off the table during the peak income years and shift it into the retirement years, when ideally they are in a lower tax bracket.
What is the new age 60 – 63 catch-up contribution?
Starting in 2025, there is a new enhanced catch-up contribution available to employees covered by 401(k) and 403(b) plans who are aged 60 to 63. Instead of being limited to just the regular $7,500 catch-up contribution, in 2025, employees age 60 – 63 will be allowed to make a catch-up contribution equal to $11,250.
What is the Mandatory Roth catch-up for high income earners?
Starting in 2026, and for the following years, if an employee makes more than $145,000 in W2 compensation (indexed for inflation) with the same employer in the previous year, that employee will no longer be allowed to make pre-tax catch-up contributions. If they make a catch-up contribution, it will be required to be a Roth catch-up contribution.
Final Thoughts…
Whether you’re still decades from retirement or just a few years away, catch-up contributions are a crucial part of retirement planning for those age 50 and older. With the 2025 limits now in place and Roth rules continuing to evolve, understanding how these contributions fit into your broader plan can help you save smarter — and avoid costly mistakes.
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 are catch-up contributions and who qualifies for them?
Catch-up contributions allow individuals age 50 and older to contribute additional funds to retirement accounts beyond the standard annual limits. For 2025, employees can contribute up to $23,500 to a 401(k) plus an extra $7,500 in catch-up contributions, for a total of $31,000 — provided they have sufficient earned income.
Can part-time workers make catch-up contributions?
Yes. As long as you have earned income and meet your employer plan’s eligibility requirements, you can make catch-up contributions even if you’re working part-time. The total contribution amount cannot exceed 100% of your W-2 compensation.
Are Roth catch-up contributions available?
If your employer plan offers a Roth option, you can make your catch-up contributions as Roth dollars. Roth contributions are made after tax, grow tax-free, and qualified withdrawals are also tax-free, offering flexibility for future tax planning.
How do catch-up contributions affect required minimum distributions (RMDs)?
Catch-up contributions do not change when RMDs begin, but the type of account matters. Pre-tax catch-up dollars increase your future RMDs, while Roth 401(k) contributions can be rolled into a Roth IRA before RMD age to avoid mandatory withdrawals altogether.
Should I prioritize catch-up contributions or pay down my mortgage?
It depends on your financial situation. If your mortgage rate is low (under 4%) and you’re behind on retirement savings, maximizing catch-up contributions may be beneficial. However, paying down your mortgage may make sense if you’re already on track for retirement and value being debt-free or if you have a higher interest rate on your mortgage.
What happens if I forget to increase my deferrals after turning 50?
Your employer’s payroll system won’t automatically adjust contributions, so you must update them manually. Missing the adjustment means forfeiting that year’s extra contribution opportunity — once the year ends, you can’t retroactively make up the difference.
What is the new enhanced age 60–63 catch-up contribution for 2025?
Starting in 2025, employees aged 60 to 63 can make a larger catch-up contribution of up to $11,250 to 401(k) and 403(b) plans, providing an additional savings boost in the final years before retirement.
What is the new rule for high-income earners and Roth catch-ups?
Beginning in 2026, employees earning more than $145,000 (indexed for inflation) in W-2 income with the same employer will be required to make catch-up contributions as Roth contributions — pre-tax catch-ups will no longer be allowed for this group.
