Preparing employers for the age 60–63 Catch-up contribution provision

This Age 50+ Catch-up provision limit increases the catch-up contribution amount to $11,250 (in 2025, subject to IRS annual cost of living adjustments), effective Jan. 1, 2025, for those participants between ages 60-63, who are in a 401(k), 403(b) or governmental 457(b) plan that permits these enhanced deferrals (“Age 60-63 Catch-up”). 

401(k) or 403(b) plans that permit Age 60-63 Catch-up:

• A participant can take advantage of this additional catch-up contribution if they (1)  attain age 60, but are not older than age 63, by the end of the calendar year, and (2) have contributed the maximum amount under the Internal Revenue Code Section 402(g) general annual deferral limit (including any available amounts under the Special 15-Year Catch-Up permitted under a 403(b) plan).
• After the calendar year in which a participant has reached age 63, the standard Age 50+ Catch-up limit will apply, meaning that those participants who are age 64 and older in a calendar year can only contribute up to the Age 50+ Catch-up contribution amount.
• Like the Age 50+ Catch-up contribution, the increased catch-up contribution limit for participants between 60-63 is coordinated among 403(b) plans, 401(k) plans, SARSEPs, and SIMPLE retirement plans.
• Like the Age 50+ Catch-up contribution, the increased catch-up for participants between 60-63 is not subject to the Internal Revenue Code Sections 415(c) annual additions limit.
   

457(b) plans that permit Age 60-63 Catch-up:

• A participant can take advantage of this additional catch-up contribution if they attain age 60, but are not older than age 63, by the end of the calendar year and provided they have contributed the maximum amount of the Code Section 457 general contribution limit.
• Like the Age 50+ plus Catch-up contribution, a participant is not eligible to use both the increased catch-up for participants between the ages of 60-63 and the Special 457 Catch-Up provision in the same tax year; however, they are permitted to use whichever catch-up is greater.
• After the calendar year in which a participant has reached age 63, the standard Age 50+ Catch-up limit will apply, meaning that those participants who are age 64 and older in a calendar year not contributing under the Special 457 Catch-up can only contribute up to the Age 50+ Catch-up contribution amount.
   

How does the Age 50+ Catch-up coordinate with the Mandatory Roth Contribution?

SECURE 2.0 added a further stipulation on the Age 50+ Catch-up provision, starting in 2026:

• If a participant’s IRC Section 3121(a) wages (often referred to as “FICA wages” and are reported in Box 3 of Form W-2) in the previous year, paid by the employer sponsoring the plan, were more than $150,000 (subject to IRS annual cost of living adjustments in $5,000 increments), the participant may only contribute the increased age-based catch-up as a Roth contribution.  

How does the 403(b) Special 15-Year Catch-up coordinate with the Mandatory Roth Catch-up Contribution?

• If the plan offers both the Age 50+ Catch-up and the Special 15-Year Catch-up and the participant is eligible for both catch-ups in the same year, the Special 15-Year Catch-up would be contributed first, as either pre-tax and/or Roth, and then the Age 50+ Catch-up would be contributed on a Mandatory Roth only basis.
• The same rule would apply if the participant subject to the mandatory Roth contribution was eligible for the increased Age 60-63 Catch-up provision and the 403(b) Special 15-Year Catch-up provision in the same year.

How does the Special 457 Catch-up coordinate with the Mandatory Roth Catch-up Contribution?

If the plan offers both the Age 50+ Catch-up and the Special 457 Catch-up and the participant is eligible for both catch-ups in the same year, the participant cannot use both catch-ups in that year, but may use the catch-up that permits the greater contribution amount to the 457(b) plan.

Below are 3 possible scenarios in this instance:

• If the Special 457 Catch-up is greater than the Age 50+ Catch-up then the participant could contribute under the Special 457 Catch-up, which is not affected by the mandatory Roth contribution rules.  The participant may contribute under the Special 457 Catch-up on a pre-tax and/or Roth contribution basis.
• If the Age 50+ Catch-up is greater than the Special 457 Catch-up, then a portion of the Age 50+ Catch-up (up to the amount calculated under the Special 457 Catch-up for that year) may be made as either a pre-tax and/or Roth contribution.  The remaining amount must be made as a mandatory Roth contribution under the Age 50+ Catch-up. 

• The same rule applies to a participant who is eligible for the Special 457 Catch-up and the increased catch-up for Ages 60-63. That is, a portion of the increased catch-up for ages 60-63 (up to the amount calculated under the Special 457 Catch-up for that year) may be made as either a pre-tax and/or Roth contribution.  The remaining amount must be made as a mandatory Roth contribution under the increased catch-up for ages 60-63.

Plan Sponsor Considerations

Since permitting the Age 60-63 Catch-up Contributions is optional, the following are some factors and actions that should be taken into consideration by plan sponsors:

• The plan document will need to be amended to add Age 60-63 Catch-up and related details (including whether employer matching contributions will also apply to these increased catch-up contributions).
• Applicable Salary Reduction Agreements will need to be updated.
• The Plan’s payroll systems must recognize eligible participants and permit increased limits.
• The change must be communicated to plan participants. 

Visit the SECURE 2.0 Employer Resource Center