Aged 60 to 63 With a 401(k)? Here's How New Contribution Rules Could Impact Your Retirement Savings

The IRS now allows a narrow, specific window for accelerated catch-up contributions.

Between the ages of 60 and 63, you can make additional catch-up contributions to tax advantaged retirement accounts. Per the SECURE 2.0 Act, at ages 60, 61, 62 and 63, individuals with an employer-sponsored retirement plan may contribute an additional $11,250 per year in 2025. This replaces the ordinary catch-up contributions of $7,500 per year that apply to employer-sponsored retirement accounts. These accelerated contributions fall off starting at age 64 and do not apply to individual retirement accounts (IRAs).

Here’s how it works and the things you should know. You can also use this free tool to match with a financial advisor if you have questions about your own circumstances.

What Are Catch-Up Contributions?

All tax-advantaged retirement accounts have a maximum contribution limit. This is the most money you can deposit in the account from earned income each year. You cannot contribute any money to tax-advantaged retirement accounts from sources that don’t count as earned income, such as portfolio returns. In general, the only way to fund a tax-advantaged retirement account without earned income is when you convert an employer-sponsored portfolio to an IRA.

For employer-sponsored accounts, like a 401(k), you can contribute up to $23,500 per year. Your employer can make matching contributions, potentially increasing your portfolio’s total funding to around $70,000 per year. These numbers are updated each year. For IRAs (including Roth IRAs), you can contribute up to $7,000 per year.

Starting at age 50, the IRS allows what are called “catch-up contributions.” These are additional contributions that you can make to tax-advantaged retirement accounts beyond the standard limit. For employer-sponsored retirement accounts, in 2025 you can make $7,500 in catch-up contributions. This allows a total contribution limit of $31,000 (plus employer contributions) each year. For IRAs, in 2025 you can make $1,000 in catch-up contributions. This allows you a total contribution limit of $8,000 each year.

The purpose of catch-up contributions is to help households prepare for nearing retirement. In particular, age 50, retirement is close enough to become a more urgent issue while still far enough away for households to accumulate reasonable wealth through savings. For example, say that you started with no savings at all at age 50, then contributed the full $31,000 per year into a portfolio generating an average 8% annual return. You might have around $1.04 million in savings by retirement. Additional contributions give you an additional opportunity to catch up on building your nest-egg in a tax-advantaged account.

A financial advisor can help you decide if catch-up contributions make sense for your retirement goals.

What Are the SECURE 2.0 Contributions?

In 2022, Congress passed the SECURE 2.0 Act. This is a wide-ranging piece of legislation that updates many aspects of the retirement system, in particular many of its tax-advantages.

Among these changes, the SECURE 2.0 Act created accelerated catch-up contributions. Individuals age 60, 61, 62, and 63 have their catch-up contribution limit increased to $11,250. This is instead of the original catch-up contribution limit, not in addition to it. So, a 61 year old can contribute a total $34,250 to their 401(k) in a single year ($23,000 ordinary contribution limit + $11,250 accelerated catch-up contribution limit).

This accelerated catch-up contribution only applies to employer-sponsored retirement accounts. You cannot use this with an IRA, meaning that most self-employed individuals cannot access this retirement benefit.

The accelerated limit falls off at age 64. The age limits are defined by your age as of the end of the year. This means that you can make accelerated catch-up contributions in full for the years when you are age 60, 61, 62 or 63 at the end of the calendar year. You can make ordinary catch-up contributions for the years in which you are between 50 and 59 at the end of the calendar year, and for the years in which you are 64 or older at the end of the calendar year.

The Impact of SECURE 2.0 Contributions

What does this mean for a household?

If you contribute the maximum amount to your retirement account each year, the accelerated SECURE 2.0 contributions will give you an additional $3,750 per year in savings. Over the four years that you are eligible to make these contributions, this would come to an additional $15,000 in total retirement savings.

Say you have a portfolio returning an average 8% each year. Starting at age 60 you begin making your accelerated catch-up contributions of $3,750 for each of the four eligible years. By age 64, you might have around $17,000 in additional savings. By age 67 you might have an additional $21,287 in additional savings.

In full, say that at age 60 you make a maximum contribution of $34,250 to your 401(k) for four years. Then from age 64 to 67 you can make a maximum contribution of $31,000 to your 401(k). At an average 8% rate of return, you might collect about $295,000 in your 401(k). By contrast, with just the standard $31,000 maximum catch-up contributions, between age 60 and 67 you might save about $276,000 in your 401(k). In this example, taking advantage of the additional catch-up contributions could potentially yield nearly an additional $20,000 in the few short years before you pull the trigger on retirement.

Like with all catch-up contributions, this is only an option for households that can afford to contribute the maximum amount to their retirement accounts. However, for households with the capacity, this can be a nice way of boosting your savings a little bit.

Consider matching with a financial advisor if you’re curious to hear a professional’s input on your retirement plan.

The Bottom Line

The IRS now allows for additional catch-up contributions. If you are between the ages of 60 and 64, you can contribute an additional $11,250 to an employer-sponsored retirement account, rather than the standard $7,500.

Tips on Planning for Catch Up Contributions

Catch-up contributions are a tricky area. For households behind on their savings, these can be a potentially game-changing way to build retirement wealth. But, they require having that extra $31,000 on hand to begin with. If you want to start accelerating your retirement savings, here’s how you can plan for making the most of catch-up contributions.
A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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Aged 60 to 63 With a 401(k)? Here’s How New Contribution Rules Could Impact Your Retirement Savings