{"id":1502256,"date":"2024-11-14T10:45:00","date_gmt":"2024-11-14T15:45:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1502256"},"modified":"2024-11-14T10:45:00","modified_gmt":"2024-11-14T15:45:00","slug":"new-401k-super-catch-up-contribution-available-in-2025","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/new-401k-super-catch-up-contribution-available-in-2025\/1502256\/","title":{"rendered":"New 401k ‘Super Catch-Up’ Contribution Available In 2025"},"content":{"rendered":"

New 401k ‘Super Catch-Up’ Contribution Available In 2025<\/span><\/p>\n

\n

In a significant new wrinkle in retirement savings rules, some older workers will be able to put several thousand more dollars into 401(k) and similar retirement plans in 2025<\/strong>. The feature was included in the 2022 SECURE 2.0 Act, which stipulated that it would take effect in 2025.\u00a0<\/p>\n

First, note that the general contribution limit for\u00a0401(k), 403(b), 457, and the federal employees’ Thrift Savings Plan\u00a0in 2025 will be $23,500. Those who are between ages 50 and 59 — or age 64 and older — will be able to contribute $31,000. Those limits are up $500 from this year.<\/p>\n

Women and men between age 60 and 63 will have significantly higher contribution 401(k) contribution limits in 2025.\u00a0<\/strong><\/a><\/p>\n

The new twist affects those who will be between 60 and 63 years old <\/strong>in 2025 and subsequent years. They’re now granted the power to make “super catch-up contributions.” Specifically, that means they can pour $34,750 into their workplace retirement plans in 2025 — $4,250 more than their total for 2024.\u00a0<\/strong>You qualify for this break by turning one of those qualifying ages anytime during the year. For example, someone who turns 60 in November can make the full super catch-up contribution for that year.\u00a0<\/p>\n

Federal law doesn’t require employers to allow catch-up contributions, but adoption of the feature is nearly universal<\/a>. Meanwhile, a recent CNBC<\/em><\/a> survey found that 40% of American workers are lagging <\/strong>in their saving and planning for retirement, and that 21% of retirees have no savings at all. <\/strong>Similarly, a Bankrate survey found 35%<\/a> of Boomers consider their savings “significantly behind” where they should be.\u00a0<\/p>\n

Contribution limits for under-60 workers will only rise by $500 next year<\/strong><\/a><\/p>\n

The super catch-up feature was included in the 2022 SECURE 2.0 Act, which stipulated that it would take effect in 2025.\u00a0Another catch-up contribution twist is slated to take effect in 2026<\/a>: For those who make more than $145,000 in 2025, all 2026 catch-up contributions must be made to Roth accounts<\/strong>. The same test based on prior-year earnings will continue to apply in subsequent years.\u00a0<\/p>\n

Traditional 401(k) contributions aren’t taxed in the year they’re made, but instead are taxed upon withdrawal. Roth accounts flip the tax benefits<\/strong>: When money is put into a Roth, it’s subject to federal income taxes, but qualified withdrawals in retirement are tax-free.\u00a0 \u00a0<\/p>\n

A Vanguard report<\/a>\u00a0on the behavior of nearly 5 million participants in its retirement plans suggests that the new break will only be used by a small percentage<\/strong> of those eligible to use it. Vanguard reports that, as of 2023:\u00a0\u00a0<\/p>\n

14% of participants max out their contributions
\n\t15% of those eligible for catch-up contributions take advantage of the opportunity<\/p>\n

Traditional and Roth IRA limits for 2025 aren’t changing:<\/strong> As with this year, qualified individuals can contribute $7,000, with an additional $1,000 allowed for those who will be 50 or older at any point in the year.\u00a0\u00a0<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 11\/14\/2024 – 05:45<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/personal-finance\/new-401k-super-catch-contribution-available-2025<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

New 401k ‘Super Catch-Up’ Contribution Available In 2025 In a significant new wrinkle in retirement savings rules, some older workers will be able to put…<\/p>\n","protected":false},"author":0,"featured_media":1502257,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1502256","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1502256","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1502256"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1502256\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1502257"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1502256"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1502256"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1502256"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}