The new guidance is for a specific workplace situation, but it is still a good reminder for all of us to check our retirement savings and, if possible, max them out, before the end of the tax year.
I confess. With every passing day, I find retirement more and more appealing.
True, I love writing. I’ve also been fortunate enough to make most of my life’s earnings from tapping away on a keyboard. But, for the most part, traditional journalism and its internet age offshoots aren’t the most lucrative jobs.
So, I’ve saved for retirement. And I also regularly advise readers of the ol’ blog to use the various tax-advantaged ways to build their own comfortable nest egg.
New retirement law boosts savings options: The latest major retirement law overhaul, Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0, shares my save now for later perspective. SECURE 2.0 enhanced myriad tax-favored retirement options for all types of workers.
And today, the Treasury Department and Internal Revenue Service issued final regulations on a part of the retirement law that affects older employees looking to further feather their nest eggs.
The guidance, to be published in the Sept. 16 Federal Register, addresses several SECURE 2.0 provisions related to catch-up contributions. These are the added amounts that workers age 50 or older are allowed to make to certain workplace retirement plans.
Part of today’s announcement affects certain higher-income plan participants. The final regulations require that their catch-up contributions be designated as after-tax Roth contributions.
The final regulations also provide guidance for a group of employees, those between ages 60 and 63, who under SECURE 2.0 can participate in newly established SIMPLE, or Savings Incentive Match Plan for Employees, plans. These workplace-provided plans are designed for small businesses (those with 100 or fewer employees), and offer employees a SIMPLE IRA or SIMPLE 401(k).
Final regulation tweaks: Treasury and the IRS note that today’s final regulations generally follow the proposed ones released earlier. However, some changes were made in response to comments received on the first round of guidance.
And most of the regs will affect the companies that offer the plans.
The important thing for workers to know is that the final regulations generally will apply in 2027.
That means, says the IRS, the rules relating to the Roth catch-up requirement generally apply to contributions in taxable years beginning after Dec. 31, 2026. However, certain governmental plans and plans maintained under a collective bargaining agreement have a later applicability date.
The final regulations also permit plans to implement the Roth catch-up requirement for taxable years beginning before 2027 using what the IRS and Treasury say is “a reasonable, good faith interpretation of statutory provisions.”
Explore other SECURE 2.0 opportunities: While today’s official regs regarding some SECURE 2.0 changes affect a relatively small part of the overall bill’s expansive coverage, the announcement reminds us to take a look at our current retirement savings.
The fast-approaching final quarter of the year is a good time to assess the status of our post-work finances, both retirement funds at work and those opened separately, such as a traditional or Roth IRA.
For the 2025 tax year, employees who participate in a workplace plan — typically 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan — can contribute a maximum of $23,500 to their account.
Yeah, I know. For most of us, that’s an unattainable level. But if you can bump up your paycheck contributions even a bit now, the compounding factor will help majorly by the time you’re ready to call it quits at work.
If it is possible for you to increase your workplace plan contributions by any amount at all, remember that you must do so by the end of the tax year.
As for individual retirement arrangements, the 2025 annual contribution limit to either a tax-deferred traditional IRA or a tax-free-withdrawal Roth version is $7,000. With IRAs you do have more time, specifically until next April 15 Tax Day, to max out your IRA contributions for this year. But again, the earlier you put money into the account, the longer it has to grow.
Catch up as much as you can: SECURE 2.0 also gives older individuals a chance to save even more. The law’s IRA catch‑up contribution limit this year for those age 50 or older is another $1,000.
The catch-up contribution limit is bigger for 50-plus workplace plan participants. They can add another $7,500 to their 401(k) et al accounts for 2025. That math means these older workers can contribute a maximum $31,000 to their company-provided accounts.
And SECURE 2.0 has an even larger catch-up contribution limit for employees aged 60, 61, 62, and 63 who participate in these plans. For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500.
Watch out for earnings limits: Of course, this being the Internal Revenue Code, there are other things to consider.
Notably, if you make a lot of money, you contribution options could be trimmed.
Your marital status, an whether your spouse is covered by a workplace retirement plan, also affects the tax advantages of some plans.
You can read about the 2025 retirement plan contribution maximums and limits in Part 8 of the ol’ blog’s 2025 tax inflation series post Law changes, inflation boost benefits of tax-favored retirement plans, especially for older workers.
Even if you can’t max out your retirement plan contributions, any additional amount will pay off when you finally do retire.
