401(k) Super Catch-Ups: Are They Right for You?
With super catch-up contributions to your 401(k), you can save an additional $11,250 if you are between 60 and 63. But should you?
If you will be 60 to 63 in 2025, a super catch-up contribution may be just the retirement planning hack you need. It's an effort by the Government to address Americans' retirement savings problem, particularly among workers over 50.
A recent AARP survey found one in five adults age 50 and over have no retirement savings at all, and more than half are worried they won’t have enough cash to support their lifestyle when they do retire. That’s just the latest survey to illuminate a problem that has been around for years.
To address that savings shortfall: enter the super catch-up. Available to 401(k) plans since the start of 2025, this provision of the SECURE Act 2.0 enables workers between 60 and 63 to save an extra $11,250 in their 401(k).
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That’s higher than the $7,500 workers over 50 can save in standard catch-up contributions. All told, for 2025, older workers can save as much as $34,750 in a tax-advantaged retirement savings account.
“The purpose of this policy change is to give individuals an opportunity to catch up on their retirement savings during their peak earning years. While individuals should start saving early for retirement, many do not have the means or ability to do so earlier in their careers; they are often faced with other financial priorities over the years like paying down student debt, saving for a house, saving for a child's college,” says Jillian Enoch, director, public policy retirement and healthcare at Fidelity Investments.
“At the age of 60, many can now re-focus on retirement, and this gives them a chance to build up their nest egg.”
Super catch-up rules
Under the super catch-up rules, employees in 401(k), 403(b), and governmental 457(b) plans that currently offer catch-up contributions can participate in this stepped-up savings.
The individual has to be 60, 61, 62 or 63 by the end of the calendar year and already contributing the maximum amount to their defined contribution plan.
There’s a catch: employers don’t have to offer this super catch-up feature. You have to check with your company, plan sponsor or payroll provider to see if you can take advantage of this new feature. Once the employee turns 64, they revert to the standard age 50+ catch-up contribution limit of $31,000 for 2025.
While super catch-up provisions look good on paper, not everyone is a fan of this new feature. After all, as it stands, only 14% of workers max out their 401(k)s, with the vast majority of these contributors earning more than $150,000, according to Vanguard. Plus, roughly half of U.S. workers don’t even have access to an employer-sponsored retirement plan.
“The catch-up contributions aren't really beneficial for most people,” says Anqi Chen, senior research economist and assistant director of savings research at the Center for Retirement Research at Boston College.
“A common retirement goal is to save 15 percent, including employer contributions, of income for retirement per year. Someone making $100,000 would aim to save $15,000 a year. To save $34,750 for retirement, a worker would have to be making $230,000. If they have housing payments and are managing their debt and other expenses, a $34,750 contribution limit just would not be relevant for them.”
If you can swing it, go for it
Still, if you can afford to save the additional $11,250, Rob Williams, managing director of financial planning, retirement income and wealth management for the Schwab Center for Financial Research, says super catch-up contributions can be a more powerful way to save money for retirement than investing in individuals stocks or chasing the latest cryptocurrency.
“It enables you to save more and invest in a disciplined way,” says Williams, noting that in conjunction with taking advantage of super catch-up contributions, pre-retirees can push out retirement to give that extra money more time to grow.
Is the super catch-up right for you
Are you mulling whether the super catch-ups are right for you? If you check off these three boxes, then it may be a way to boost your retirement savings nest egg.
1. You can afford it. To take advantage of this extra contribution vehicle, you must be able to afford it. After all, you don't want to hurt your cash flow and ability to keep your debt in check if you contribute an extra $11,250 each year for three years.
Consider your expenses and lifestyle; if you can easily live without the extra money, go for it.
2. Your retirement savings need a boost. Just because you can doesn't mean you have to. If you are on track with your retirement savings, a super catch-up may not be necessary. That money can go toward other investments or other financial goals.
If you fall short and can afford it, taking advantage of the super catch-up is a potentially tax-advantaged way to amp up your retirement savings.
3. You need a tax break. Catch-up contributions in a traditional 401(K) (vs. a Roth) lower your income, which means you owe less money at tax time.
If you are in a high tax bracket or are simply looking for a tax break, this is a way to achieve that. You may not need to increase your retirement savings, but that doesn't mean it's not a tax-smart strategy to pursue.
Spread the wealth
That’s not to say Williams thinks all of your savings should go into a 401(k), especially if you have a lot amassed.
He advocates spreading the savings out across a tax-deferred account such as a 401(k), an after-tax savings vehicle such as a Roth IRA or Roth 401(k) and a brokerage account.
“A lot of clients and investors wait until they are RMD (required minimum distribution) age to take any withdrawals from a 401(k) or IRA and are surprised the tax bill suddenly jumps up,” says Williams.
“Brokerage accounts can be quite tax efficient if you are in low-cost ETFs that don’t have a lot of turnover and are not generating capital gains.”
Ultimately, it all depends on your tax bracket and situation to determine whether you will benefit from this three-pronged approach to retirement savings.
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