The prospect of financial insecurity in retirement is a harsh reality for many Americans.
The demise of traditional pension plans has shifted the burden of saving for retirement onto the shoulders of individual workers. Meanwhile, the Social Security trust fund is on a path to depletion and mandatory benefit reductions by 2033 absent major reform.
Congress has taken many steps over the past 50 years to incentivize individual retirement savings and investment, beginning with the introduction of the Individual Retirement Arrangement or IRA account in 1974. The most significant enhancements in two decades appeared with the 2019 Secure Act and its 2022 successor, Secure 2.0. The latest iteration includes a special “super catch-up” provision designed to allow workers to top up their retirement plan contributions during a limited four-year window from age 60 to age 63.
The IRS code limits the total amount that an employee can direct into 401(k), 403(b) or 457 defined contribution plans each year. The limit for 2025 is $23,500, up from $23,000 in 2024. Since 2001, contribution limits have been indexed to inflation and workers aged 50 or above were allowed to throw in a few extra bucks as a catch-up contribution, set at $7,500 for this year and next. Secure 2.0 went this option one better for older savers closing in on retirement.
Beginning in 2025, any worker who turns 60-63 during the calendar year will be allowed to toss in an additional $3,750 on top of the $7,500, or a super catch-up of $11,250. That means in practice that an employee aged 60 to 63 could defer a total of $34,750 per year. At 64 the catch-up falls back to $7,500.