New 'Super Funding' Rule Boosts 401(K) Contributions for Older Workers in 2025

A major 401(k) update for 2025 will allow eligible workers aged 60 to 63 to make significantly larger "catch-up" contributions, raising the total annual deferral limit to $34,750.

Starting in 2025, Americans nearing retirement can take advantage of expanded 401(k) contribution rules, allowing greater savings in the final years of their careers. Under the Secure 2.0 Act, individuals aged 60 to 63 will be permitted to contribute an additional $11,250 in catch-up contributions, on top of the standard $23,500 deferral limit. That brings their total annual contribution cap to $34,750.

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The standard catch-up amount for workers aged 50 to 59 and those 64 and older remains at $7,500, according to 2025 guidelines. Eligibility is based on a worker’s age as of December 31, 2025, explained Dan Galli, certified financial planner. "If you’re age 59 early in 2025 and turn 60 in December, you can make the catch-up," Galli noted. "Conversely, you can't make the contribution if you're 63 now and will be 64 by year-end."

The vast majority of retirement plans—97%, per Fidelity—have incorporated the new catch-up provision. However, in 3% of plans that haven't updated for 2025, catch-up contributions will still be capped at $7,500.

Despite the enhanced limits, participation remains limited. According to Vanguard's How America Saves report, just 15% of employees made catch-up contributions in 2023.

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Galli described the higher catch-up limit as "a great tool in the toolbox," especially for high earners seeking additional tax deductions. While 401(k) contributions are made pre-tax, withdrawals in retirement are subject to ordinary income tax.

Additionally, some savers may benefit from after-tax deferrals, though only 22% of employer plans offered this option as of 2023.