New ‘Super Funding’ Limits for 401(k) Savers in 2025: Here’s Who Can Benefit
A significant change to 401(k) savings for 2025 offers a new opportunity for older workers to save more for retirement. As Americans face rising retirement costs, with many expecting to need $1.26 million to retire comfortably, a growing concern about outliving savings has led to new options for boosting retirement funds.
Starting in 2025, older workers can take advantage of an expanded “catch-up” contribution limit. For workers aged 50 and older, the 401(k) contribution limit is increasing to an extra $7,500, bringing the total deferral limit to $30,000. However, Secure 2.0 legislation offers even more help: Workers between the ages of 60 to 63 can defer up to $34,750, thanks to a higher catch-up contribution limit of $11,250 for this age group.
Despite the opportunity, not all retirement plans will implement this change. According to Fidelity data, 3% of retirement plans won’t adopt the higher catch-up limits for 2025, meaning contributions will stop automatically once the $7,500 deferral limit is reached.
Experts emphasize the benefits of this "super funding" feature for higher earners looking for a tax deduction, as 401(k) contributions are made pre-tax, providing an immediate tax break. However, participants will owe income tax on withdrawals later.
To be eligible for the higher catch-up contribution, investors must be the qualifying age by December 31, 2025. For example, someone who turns 60 in December 2025 qualifies, while someone turning 64 before the year ends will not.
Additionally, some high earners may also consider after-tax deferrals, though only 22% of employer plans offered this feature in 2023.