The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans, and the federal government's Thrift Savings Plan remains $7,500 for 2025.
Therefore, participants in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan who are 50 and older can contribute up to $30,500, starting in 2024.
For example, the IRS has just announced that for 2025, the catch-up limit for those age 50+ is $7,500 and the higher catch-up contribution limit for those age 60-63 is $11,250. To qualify for the higher catch-up contributions, participants must meet specific criteria: Be 60, 61, 62, or 63 on Dec. of the calendar year.
If you're 50 or older, you can make an additional $7,500 in catch-up contributions. If your employer's retirement plan allows after-tax 401(k) contributions, however, it brings the total allowed contribution, including employer match, to $69,000 per year, or $76,500 for those 50 or over.
What Is the Rule of 55? Under the terms of this rule, you can withdraw funds from your current job's 401(k) or 403(b) plan with no 10% tax penalty if you leave that job in or after the year you turn 55. (Qualified public safety workers can start even earlier, at 50.)
Fund Your 401(k) to the Max
Because your 50s and early 60s are likely to be your peak earning years, you may also be in a higher marginal tax bracket now than you will be during retirement, meaning that you'll face a smaller tax bill when that time comes.
The 401(k) contribution limit for 2024 is $23,000 for employee salary deferrals, and $69,000 for the combined employee and employer contributions. If you're age 50 or older, you're eligible for an additional $7,500 in catch-up contributions, raising your employee deferral limit to $30,500.
The new super catch-up contribution
They're allowed to contribute a bit more on top of the standard contribution limits for those plans. For 2025, the standard catch-up contribution limit for 401(k) plans is $7,500.
You can still contribute to a Roth IRA (individual retirement account) and/or a traditional IRA as long as you meet the IRA's eligibility requirements. It usually makes sense to contribute enough to your 401(k) account to get the maximum matching contribution from your employer.
The annual elective deferral limit for 401(k) plan employee contributions is increased to $23,500 in 2025. Employees age 50 or older may contribute up to an additional $7,500 for a total of $31,000.
Other states, such as California, typically only allow you to contribute up to 91.45% of earnings to cover additional state-required withholdings, like California's state disability insurance.
The IRS defines a highly compensated employee according to the following criteria: Officers making over $160,000 in 2025 (up from $155,000 for 2024) Owners holding more than 5% of the stock or capital. Owners earning over $155,000 in 2024, not adjusted for inflation, (up from $150,000 in 2023) and holding more than 1%
If you already make the maximum contribution to your 401(k) and can afford to increase this, making catch-up contributions can save you a significant amount of money in tax. However, the majority of workers simply do not earn enough to be able to contribute the maximum amount. Internal Revenue Service.
By age 50, you would be considered on track if you have three-and-a-half to six times your preretirement gross income saved. And by age 60, you should have six to 11 times your salary saved in order to be considered on track for retirement.
Bottom Line. It's best to take advantage of catch-up contributions and any other opportunities that can boost your retirement savings. You also want to avoid making investing mistakes that can jeopardize the money you've put away. As you get older, you'll generally want to decrease your risk exposure.
Individuals who are age 50 or over at the end of the calendar year can make annual catch-up contributions. Annual catch-up contributions up to $7,500 in 2023 and 2024 ($6,500 in 2021-2020; $6,000 in 2015 - 2019) may be permitted by these plans: 401(k) (other than a SIMPLE 401(k))
This is where the rule of 55 comes in. If you turn 55 (or older) during the calendar year you lose or leave your job, you can begin taking distributions from your 401(k) without paying the early withdrawal penalty. However, you must still pay taxes on your withdrawals.
In 2025, the 401(k) contribution limit for participants is increasing to $23,500, up from $23,000 in 2024. Participants who are 50–59 and 64+ can save an additional $7,500 in 2025 in catch-up contributions. There's a brand new extended catch-up contribution provision for savers aged 60 to 63.
As a reminder, employees who are 50 and older are allowed to contribute additional money to their employer-sponsored retirement plan, known as a catch-up contribution. For 2024, the catch-up contribution is an extra $7,500 on top of the $23,000 limit for everyone else, for a total limit of $30,500.
One great way to catch up is to contribute more to tax-advantaged plans, including individual retirement accounts (IRA) and workplace plans like a 401(k). If you're 50 or older, you're eligible to contribute beyond the maximum annual contribution limit. Check here for IRS Contribution Limits.
There are guidelines to help you set one if you're looking for a single number to be your retirement nest egg goal. Some advisors recommend saving 12 times your annual salary. 12 A 66-year-old $100,000-per-year earner would need $1.2 million at retirement under this rule.
For personal finance guru Dave Ramsey, one retirement account option stands apart from the rest. Ramsey recommended contributing to a company-administered 401(k), but not necessarily the traditional version. “We always recommend the Roth option if your plan offers one,” said Ramsey.