Catch-Up Contributions: What You Need to Know

I wrote this shortly after I made the first catch-up contributions of my life. Yes, I'm that old now. But there are a few changes with catch-up contributions starting in 2025, so it seemed like a good time to cover the whole subject broadly.

Catch-up contributions are a little bit silly. I mean, anybody can save as much as they want for retirement at any age in a taxable account. There are no limitations. All a catch-up contribution does is allow you to get a little more tax, estate planning, and asset protection benefits in your portfolio since a little more of your savings goes into tax-advantaged accounts and a little less goes into a non-qualified taxable brokerage account. It seems these catch-up laws introduce unnecessary complexity to our already too-complex system, but I'm not going to look a gift horse in the mouth.

IRA Catch-Up Contributions

The IRA catch-up contribution in 2025 is $1,000, as it has been for some time. It can be made to either a traditional or a Roth IRA (assuming you are allowed to contribute directly) as early as the beginning of the year in which you turn 50. In 2025, the IRA contribution for someone under 50 is $7,000. For someone over 50, it's $8,000. Pretty simple.

401(k) and 403(b) Catch-Up Contributions

For a 401(k) or 403(b), catch-up contributions for 2025 are $7,500. This additional contribution is added to the “employee deferral” contribution limit, which is $23,500 in 2025. Like the IRA contribution, it starts the year you turn age 50. If you're under 50, you can contribute $23,500 to your Roth or tax-deferred 401(k) or 403(b). If you're 50+, you can contribute $31,000. Note that “employee deferral” does not just mean tax-deferred contributions. They can be tax-deferred or Roth.

Multiple 401(k)s

If you have income from unrelated employers (including yourself as a self-employed person), you can contribute to more than one 401(k), each with its own 415(c) limit of $70,000 in 2025. The catch-up contribution is in addition to that 415(c) limit, so you could put $77,500 into one 401(k). However, like the employee deferral limit, you only get one catch-up contribution, no matter how many 401(k)s you could use. If you were eligible for two, you (together with your employers) could put no more than $77,500 into one of them and $70,000 into the other. Note that 403(b)s and solo 401(k)s share the same 415(c) limit.

More information here:

Multiple 401(k) Rules – What to Do with Multiple 401(k) Accounts

The New Catch-Up Contribution for Savers in Their Early 60s

If you turn 60-63 in 2025, you are not limited to a catch-up contribution limit of just $7,500 to your 401(k) or 403(b). You are eligible for a higher catch-up contribution of $11,250 instead, raising the total amount that can go into one 401(k) or 403(b) to $81,250 instead of just $70,000 or $77,500 in 2025. This was part of Secure Act 2.0. After age 63, you go back to the $7,500 limit. There are also additional catch-up contributions at these ages for 457(b)s and SIMPLE IRAs (see below).

No, I have no idea why Congress thought those ages were so special, but that's what was in Secure Act 2.0. Hey politicians, way to add complexity.

The Special (15-Year) 403(b) Catch-Up Contribution

If you have worked for the same qualifying employer (public school system, hospital, home health service agency, health and welfare service agency, church, or association of churches) for at least 15 years, you can make an additional catch-up contribution of the lesser of:

$3,000, $15,000, reduced by the amount of additional elective deferrals made in prior years because of this rule, or $5,000 times the number of the employee’s years of service for the organization, minus the total elective deferrals made for earlier years.

Wow. That's complex, but it's no more than $3,000 for five years, so it's $15,000 total. Note that this is in addition to the extra $7,500 catch-up, although even that has to be specifically allowed by the plan.

SEP-IRA Catch-Up Contributions

Sorry, there's no such thing. One more reason to use a solo 401(k) instead of a SEP-IRA. Catch-up contributions only apply to employee deferrals, and there are none in a SEP-IRA.

SIMPLE IRA and SIMPLE 401(k) Catch-Up Contributions

Stuck with a SIMPLE IRA because your employer hates you (or you just have a small practice where it makes sense because you're the only one saving much for retirement)? You get a catch-up contribution, too. It's $3,500 if you turn 50-59 in 2025 for a total employee deferral limit of $20,000. If you're ages 60-63, though, it's $5,250 for a total of $21,750. Note that SIMPLE IRAs have an odd rule that allows the total contribution to be higher if the employer so elects. That additional amount is the lesser of 10% of compensation or $5,000. This is not a catch-up contribution but a quirky aspect of SIMPLE accounts.

457(b) Catch-Up Contributions

You thought 403(b) catch-up contributions were complex? You haven't seen anything yet. With a 457(b), your plan can offer two separate kinds of catch-up contributions. The first is a $7,500 catch-up similar to that of a 401(k) or 403(b) for those who are 50+. If you're 60-63, that's $11,250, not $7,500, just like 401(k)s and 403(b)s. The second type of catch-up is a “special” catch-up contribution that is allowed for three years prior to the “normal retirement age specified in the plan” (and your plan may allow you to pick this number) where the lesser of

The elective deferral limit ($23,500 in 2025), basically doubling your contribution amount or That same basic annual limit plus the amount of the basic limit not used in prior years (of those last three)

can be contributed. However, the second option is not allowed if the plan also offers the age 50+ $7,500 catch-up, which most do. Confused yet? I'm not surprised. Maybe just ask HR what your maximum contribution is. But it seems like it really is a “catch-up” of contributions you didn't make in the first one or two of those last three years.

More information here:

Why You Should Max Out Your Retirement Accounts

Roth Catch-Up Contributions (2026)

Another catch-up contribution rule that starts in 2026 is that catch-up contributions for high earners (>$145,000 adjusted for inflation in wages) MUST be Roth contributions whereas previously (and still for low earners) they can be tax-deferred or Roth. This will apply to age 50+ catch-up contributions for 401(k)s, 403(b)s, and 457(b)s but not SIMPLE plans. Originally, this was supposed to go into effect for 2024 but was (probably wisely) delayed to allow more time for plans to comply with the law.

HSA Catch-Up Contributions

HSA catch-up contributions start at age 55, not age 50. Like IRAs, the amount is $1,000 extra, no matter whether you're using a single-person HSA or a family HSA. In 2025, the total contribution for someone who turns 55 this year is $5,300 (single) or $9,550 (family). Note that just because your spouse is 55+ too, you can't put an extra $1,000 into your HSA for them. They would have to have their own HSA to make their own catch-up contribution. Thus, when the second spouse turns 55, it can make sense to open a second HSA in their name. Even though the total regular contribution will be the same (even if one parent has a child on their plan, too), the total including the catch-up contributions would be $1,000 higher. It's one of those times when additional complexity does have a little bit more benefit.

 

Catch-up contribution rules can be complex, but they are worth learning about for any tax-advantaged accounts for which you are eligible.

What do you think? What catch-up contributions are you taking advantage of this year? 

The post Catch-Up Contributions: What You Need to Know appeared first on The White Coat Investor - Investing & Personal Finance for Doctors.