The IRS has released the latest 2025 contribution limits—and there's a whole new catch-up contribution category. In particular, this has implications for employees with a Starter 401(k) retirement plan. Under these new changes, SECURE 2.0 extended the catch-up limit for people between ages 60 and 63, but data from Guideline shows that 55% of eligible savers aren't even aware that they have this opportunity to begin with.
With inflation and cost-of-living still impacting American workers, this new catch-up provision could allow 60-63 year-olds to save thousands of dollars more for retirement. To ensure that employees are aware that these changes are coming so that they can maximize their retirement savings in the next year, we talked with Guideline's COO Jeff Rosenberger, who shared his insight on the category and how employers can educate employees. .
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Q: What is the new catch-up contribution category that the IRS has designated in 2025?
Jeff Rosenberger: The new extended or super catch-up contribution is for employees aged 60 to 63, who are getting closer to retirement age and may need to “catch up” in their savings. In 2025, the base catch-up limit for employees aged 50 or older (or those who are turning 50 in that calendar year) stays the same as 2024 at $7,500, while those eligible for the extended catch-up have a catch-up limit of $11,250.
Q: How important is it for employers to make employees aware of the new catch-up limit for employees 60-63?
A: Data from Guideline shows that 55% of eligible savers were not aware of this extended catch-up contribution coming in 2025. It’s critical that 401(k) providers and employers inform employees in this age group about these changes since they are often in their peak earning years and have a limited time to boost their retirement savings. Proactively communicating these changes also helps reduce the chance that employees will inadvertently exceed the contribution limits.
Q: Why is this new catch-up limit so important for these employees?
A: With higher inflation over the last few years, it can be important that US workers are able to save even more for their retirement. Knowing about the increased catch-up limit helps employees in this age group to take full advantage of this opportunity and better prepare for a secure, comfortable retirement.
Q: Why is it so important that these employees maximize their retirement savings?
A: The window to accumulate savings can narrow as these employees approach retirement. Making the most of catch-up contributions could allow them to boost their retirement nest egg. And, by saving more, they also can reap the rewards of a 401(k), like reducing taxable income and earning potential compound investment returns dependent on market activity, which can help grow savings over time.
Q: Why does the new catch-up category have implications for employees with Starter 401(k)s?
A: There are implications on Starter 401(k)s, but they’re minimal. This change is part of the SECURE 2.0 Act, which established the Starter 401(k) plans to encourage more small businesses to offer retirement benefits to their employees for the first time. : These plans automatically satisfy compliance tests and have fewer employer requirements, but the contribution limits are lower than a standard 401(k). The catch-up contribution for eligible employees with Starter 401(k) plans is $1,000, so the financial impact can be less than it is for other savers.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
