The end goal of a life of work, at least for many, however, some changes are coming to one of the more popular ways to save in the U.S: the 401(k). In 2025, people looking to save for their retirement will be getting a boost, and you don’t want to miss out. So here are a few things that you’ll need to know going into the new year.
One of the most notable changes is that employees will be able to defer $23,500 into 401(k) plans, which is up from $23,000 in 2024. However, one of the major things to note is that workers ages 50 and older will be able to make $7,500 in catch-up contributions on top of that $23,500 limit.
That’s not all though, as starting in 2025 that catch-up limit will jump up to $11,250 (about a 14% increase) for workers ages 60 to 63. That means those workers can save a total of $34,750 in 2025. This is all thanks to Secure 2.0, which was passed by U.S Congress in 2022.
Secure 2.0 also is boosting the availability of retirement plans to workers. In 2024, employers were required to extend access to part-time employees who worked at least 500 hours annually for three consecutive years. Now, in 2025, that requirement will be dropping down to two years. In addition, the legislation will require most 401(k) and 403(b) plans that were established after Dec. 28, 2022, to enroll eligible employees automatically at at least a 3% employee deferral rate.
The takeway is that starting in 2025, key 401(k) plan changes enacted via Secure 2.0 could make it easier to save for retirement, experts say. Some of these updates include higher catch-up contributions, more coverage for part-time workers and automatic enrollment.
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