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

Eric Reed

Wed, Mar 12, 2025, 6:44 AM 7 min read

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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.

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.