Catch-Up Contributions: A Powerful Way to Boost Retirement Savings
When you approach retirement age, saving becomes one of your top priorities. By age 50, you should have saved about six times your annual salary to retire comfortably. For example, if you earn $70,000, you should have set aside around $420,000. But what if you haven’t saved enough yet? That’s where catch-up contributions can help.
If you’re in your 50s and want to increase your retirement savings, keep reading. This guide offers detailed information on catch-up contributions and the recent changes under the SECURE 2.0 Act.
What Are Catch-Up Contributions?
Catch-up contributions allow you to save more than the usual annual limit in some retirement accounts once you turn 50. They apply to standard plans, such as 401(k)s, IRAs, and SIMPLE IRAs. They’re beneficial if you started saving late or had to take a break during your career.
Congress introduced this rule in 2001 to help older workers increase their retirement savings. Eligibility starts the year you turn 50, even if that’s on the last day of December. Once you reach the regular IRS contribution limit, you can add extra savings as a catch-up.
The contribution process is the same as with regular deposits. It can be through payroll deductions for workplace plans or direct contributions for IRAs.
2025 Catch-Up Contribution Limits
The IRS updates retirement plan limits annually to account for inflation and rising living costs. Here are the contribution limits for 2025, along with the additional amounts you can save through catch-up contributions.
| Retirement Plan | 2025 Standard Limit | 2025 Catch-up Contribution Limit |
| 401(k), 403(b), 457, and Thrift Savings Plan | $23,500 | $7,500 |
| SIMPLE IRA or SIMPLE 401(k) | $16,500 | $3,500 |
| Traditional or Roth IRA | $7,000 | $1,000 |
So, how does catch-up contribution work? Once you turn 50, the IRS lets you put in more than the standard limit for your retirement account. The idea is to give you extra room to save during your later working years, when you may have a higher income and fewer expenses.
For instance, if you are 50 years old and in a 401(k) Plan, the standard contribution limit in 2025 is $23,500. Since you qualify for catch-up contributions, you can add another $7,500. This brings your total to $31,000 in one year.
If you continue to contribute the maximum catch-up amount each year until age 65, that adds up to 16 years of extra savings. At today’s rates, this equals $120,000 in additional contributions alone.
Remember, both the standard limit and the catch-up limit typically increase over time. This means you’ll probably be able to save much more. With yearly increases and investment growth, you could end up with well over $150,000 to $200,000 in additional retirement savings by the time you retire.
What’s Changing Under SECURE 2.0?
The SECURE 2.0 Act introduced new rules for catch-up contributions. Some changes give you more room to save, while others limit how high earners can contribute. Here are the updates you should know:
1. Higher Catch-Up Limits at Ages 60–63
Starting in 2025, workers between the ages of 60 and 63 can contribute more than the standard catch-up. Instead of $7,500, the limit increases to $11,250 for 401(k), 403(b), 457, and Thrift Savings Plans. For SIMPLE IRAs and SIMPLE 401(k)s, the “super catch-up” limit rises to $5,250.
Employers don’t have to offer this option, but if they choose to, all plans in the same controlled group must provide it. Once you turn 64, the regular catch-up contribution limit applies again.
2. Roth-Only Rule for High Earners
Starting in 2026, if your wages from your current employer exceeded $145,000 in the prior year, your catch-up contributions must be made as Roth contributions. You’ll pay taxes upfront, but the money will grow tax-free and be withdrawn tax-free in retirement.
If your plan does not have a Roth option, you cannot make catch-up contributions. Employers can use “deemed Roth elections” to automatically treat catch-up contributions as Roth contributions for employees who meet the wage limit.
3. Special Rules for SIMPLE Plans
In addition to the super catch-up contributions, SECURE 2.0 made changes for SIMPLE IRAs and SIMPLE 401(k)s. Employers with 25 or fewer employees can raise contribution limits to 110% of the usual amounts. The IRS clarified, though, that SIMPLE plans can’t combine this 10% increase with the super catch-up for ages 60–63. Employees can choose one option or the other, but not both at once.
4. Correction Rules for Mistakes
The IRS has provided guidance on correcting mistakes if a pre-tax catch-up contribution is made when it should have been a Roth contribution. The employer can fix it by either:
- Moving the money into a Roth account and reporting it on Form W-2, or
- Doing an in-plan Roth rollover and reporting it on Form 1099-R.
Keep in mind that corrections aren’t necessary if the mistaken pre-tax amount is $250 or less.
5. Employer Compliance Deadlines
The Roth-only rule takes effect January 1, 2026. Employers have until December 31, 2026, to amend their plans and until 2027 to fully comply. During this transition period, employers can rely on a “reasonable, good faith” interpretation of the law. Collectively bargained and certain governmental plans may follow later deadlines.
6. Special Notes for Other Plans
The 403(b) 15-year service catch-up is still in effect. This rule allows some employees with at least 15 years of service with the same employer to contribute extra amounts beyond the regular age-50 catch-up, up to a lifetime limit.
457(b) plans also keep their special three-year pre-retirement catch-up provision. This lets participants who are within three years of their plan’s normal retirement age contribute more than the usual limits. It gives them a final chance to increase their savings before retiring.
Why Should You Make Catch-Up Contributions?
Catch-up contributions give you a way to make up for years when you couldn’t save as much as you wanted. Adding more to your retirement account now allows your money more time to grow and benefit from compounding.
They also offer tax benefits. Pre-tax contributions lower your taxable income right away, which can help ease the burden at tax time. Roth contributions, on the other hand, are made with after-tax dollars but allow for tax-free withdrawals later.
Plus, don’t forget, most people hit their highest-earning years in their 50s and early 60s. Catch-up contributions let you use that extra income to boost your savings before retirement.
Frequently Asked Questions About Catch-Up Contributions
1. When can I start making catch-up contributions?
You can start in the year you turn 50, even if your birthday is on December 31. The IRS counts your age as of the last day of the calendar year. That means you’re eligible for the full catch-up amount in that year.
2. Do all retirement plans allow catch-up contributions?
Most major plans do, including 401(k), 403(b), 457, SIMPLE IRA, and traditional and Roth IRAs. Some plans, like SEP IRAs, don’t allow them. Always check your plan document or ask your administrator to confirm.
3. Do employers match catch-up contributions?
Employers can, but they’re not required to. If your plan offers matching contributions, your catch-up contributions may qualify for the same match. The details depend on how your employer’s plan is set up.
4. How much extra can I save with catch-up contributions?
In 2025, you can save an extra $7,500 in a 401(k), $3,500 in a SIMPLE IRA, or $1,000 in an IRA. For ages 60–63, the “super catch-up” could let you save even more if your plan adopts it. These amounts increase over time with inflation.
5. Are catch-up contributions pre-tax or Roth?
That depends on your plan and your income. Starting in 2026, if you earn more than $145,000 in wages from your employer, your 401(k) catch-up contributions must be Roth. If you earn less, you can still choose pre-tax or Roth if your plan allows both.
6. Do catch-up contributions affect required minimum distributions (RMDs)?
Yes, because they increase your account balance. Larger balances generally mean larger RMDs when you reach the required age. Planning ahead with Roth contributions can help reduce taxable withdrawals later.
Build Your Retirement Strategies With Tax Samaritan
Catch-up contributions are one of the simplest ways to boost retirement savings if you’re 50 or older. But they’re not the only option. If you’re under 50 or want to do more than just rely on catch-ups, Tax Samaritan can help you create a strategy that builds toward the retirement you want.
At Tax Samaritan, we go beyond filing and compliance. Through our Proactive Planning, we take a holistic look at your situation, helping you align your tax, wealth, and financial decisions with your long-term retirement goals. Our focus is on forward planning and optimization, so you’re not just saving, you’re building a strategy for lasting security and peace of mind.
Ready to elevate your retirement strategy? Schedule a free 30-minute consultation with us today.
