Upcoming Changes to 401k Plan
New Opportunities for Age 60–63 Savers
If you’re over 50, you probably know about “catch-up” contributions to your 401(k). These extra amounts let you go beyond the standard contribution limit to boost your retirement savings as you get closer to retirement. Starting in 2025, there’s good news for workers in their early 60s.
Under the SECURE 2.0 Act, individuals ages 60 through 63 will be able to contribute even more to their 401(k) plans. The enhanced catch-up limit will be the greater of $10,000 or 150% of the standard age 50+ catch-up amount (which is currently $7,500 for 2025, for a total of $11,250). This new provision gives those final working years an extra boost—perfect timing for those entering their peak earning years or catching up after life’s financial detours.
If you’re in this age group, this may be a good time to consider your contribution levels and explore ways to make the most of the potential savings opportunities available.
The New Roth Requirement for Higher Earners
Another important change involves how catch-up contributions are treated for some higher-income earners. Starting in 2026, anyone earning more than $145,000 (adjusted annually for inflation) will be required to make their catch-up contributions to the Roth portion of their 401(k).
That means these contributions will be made with after-tax dollars—so you’ll pay the taxes now, but your future withdrawals in retirement will be tax-free. While this shift requires some planning around current tax exposure, it also opens the door to building more tax-free income sources for retirement.
If your income is likely to exceed this threshold, it’s a good idea to review your plan options and speak with your employer’s plan administrator to confirm whether Roth contributions are available. Some employers have indicated that they may automatically switch catch-up contributions to Roth, but practices can vary, so it’s best to confirm directly with your employer.
These new rules bring both opportunities and some important considerations. We would be happy to discuss these upcoming changes and how they impact you if we haven’t already.
Emerald Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
