Section 109 of SECURE 2.0 permits 401(k), 403(b), and governmental 457(b) plans¹ to offer higher catch-up contributions beginning in 2025 for participants attaining ages 60, 61, 62, or 63 before the end of the taxable year. For 2025, the maximum catch-up limit is the greater of $10,000 or 150% of the regular catch-up limit, and this amount will be adjusted for inflation. The regular catch-up limit for 2025 for participants under age 60 is projected to be $7,500, and the catch-up limit for those aged 60 to 63 is projected to be $11,250.²

The above plans are not required to offer catch-up contributions. However, they can be amended to add this feature and allow participants who are aged 50 or older during the tax year to make catch-up contributions above the regular elective deferral limit under Internal Revenue Code (IRC) section 402(g), or the identical limit under IRC 457(b)(2) pertaining to 457(b) plans. SECURE 2.0 allows plans to increase the catch-up contribution limit further for those aged 60, 61, 62, and 63, beginning in 2025.

Figure 1 shows the annual 2024 contribution limits and projected 2025 limits. Participants in plans that do not offer a catch-up provision may only contribute up to a projected $23,500 in 2025. If the plan permits catch-up contributions, but not the enhanced catch-up allowed by SECURE 2.0, then the maximum amount participants can contribute in 2025 is projected to be $31,000 ($23,500 plus $7,500). If the plan offers an enhanced catch-up feature, participants aged 60, 61, 62, or 63 can contribute up to $34,750 in 2025 ($23,500 plus $11,250).