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If you are an older investor and Eager to save more For retirement, there is a Big 401 (K) Change For 2025 that could help stimulate your wallet, according to experts.
Americans expect them to need $ 1.26 million retired Comfortably, and more than half expect to survive their savings, according to a mutual survey in the North West, which questioned more than 4,600 adults in January.
But from this year, some older workers can take advantage of an opportunity for 401 “super financing” (K) to help them catch up, Tommy Lucas, a certified financial planner and agent registered in Moisand Fitzgerald Tamayo in Orlando, Florida, CNBC previously said.
Here is what investors should know about this new feature 401 (K) for 2025.
Higher “remedial contributions”
For 2025, you can differ up to $ 23,500 in your 401 (K)plus one $ 7,500 additional If you are 50 and over, known as “catch -up contributions”.
Thanks to Secure 2.0the catch -up limit 401 (K) a jumped at $ 11,250 For workers aged 60 to 63 in 2025. This brings the maximum postponement to $ 34,750 for these investors.
Here is the catch -up limit of 2025 per age:
- 50-59: $ 7,500
- 60-63: $ 11,250
- 64 Plus: $ 7,500
However, 3% of retirement plans did not add the functionality for 2025, according to Fidelity Data. For these plans, catch -up contributions will stop automatically once the postpones reach $ 7,500, the company told CNBC.
Of course, many workers cannot afford to maximize employees 401 (K) or make catch -up contributions, according to experts.
For plans offering catch -up contributions, only 15% of employees participated In 2023, according to the latest data from Vanguard How America Saves Report.
“An excellent tool in the toolbox”
The higher 401 (K) catch -up is “an excellent tool in the toolbox”, in particular for higher wages looking for a tax deduction, said Dan Galli, CFP and owner of Daniel J. Galli & Associates in Norwell, Massachusetts.
While Pretax 401 (K) contributions offer initial tax relief, you will have regular income taxes on withdrawals, according to your Future tax bracket.
However, your eligibility for higher 401 (K) (K) catch -up contributions depends on the age you will have on December 31, Galli explained.
For example, if you are 59 years old at the beginning of 2025 and you are 60 years old in December, you can make up down, he said. Conversely, you cannot make the contribution if you are 63 years old now and will be 64 years by the end of the year.
In addition to the 401 catch -up contributions (K), the big savers could also consider Régal after taxwhich is another less known characteristic. But only 22% of employers' plans offered functionality in 2023, according to the Vanguard report.
