SECURE 2.0 Act Provisions to Consider in 2025

As 2025 approaches, it is an ideal time to review several SECURE 2.0 Act (“SECURE 2.0”) provisions that become effective soon or that plan sponsors may want to adopt. With the vast number of SECURE 2.0 provisions, it may be challenging to keep track of which ones apply when—and whether they are mandatory or optional. In this article, we will revisit some provisions that may have fallen off your radar, as well as provisions that are just starting to become available. Applicability of certain provisions may vary depending on a number of factors, so be sure to consult with your retirement plan provider to determine which ones may apply to your plan(s).

Special Catch-Up Contributions

One of the more puzzling SECURE 2.0 provisions is this: participants in tax-qualified deferral plans (e.g., 401(k) and 403(b) plans) qualify for an increased catch-up contribution starting in 2025—but only if they attain age 60 – 63 during the course of the year. This special contribution increases the age 50 catch-up deferral by an additional 50 percent. Why Congress decided to limit the provision to such a narrow range of participants is hard to understand. But for eligible participants, this new option may be welcome news.

For non-SIMPLE plans, the increased catch-up limit is $11,250 for 2025 (versus the standard $7,500). This amount will be indexed for cost-of-living adjustments (COLAs) each year.
For SIMPLE IRA or SIMPLE 401(k) plans, a smaller catch-up applies.

For 2025, the increased amount is $5,250 (versus the standard $3,500). This provision may be considered optional, but only in a limited sense. Plans are not required to offer catch-up contributions at all, but nearly all plans do. While further guidance from the IRS would be welcome, if a plan offers catch-up contributions then it would seem likely that it would also permit this special catch-up contribution, especially because those who are able to make it are probably those with higher salaries and perhaps in leadership roles. Although payroll providers and other service providers will have to adjust some of their processes, this provision will almost certainly apply to most plans moving forward.

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SECURE 2.0 Act Provisions to Consider in 2025

Special Catch-Up Contributions

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