The Secure Act 2.0 allows for higher catch-up contributions for ages 60-63. This article will go over these additional amounts and how the system will work to allow for them.
What are catch-up contributions?
A “catch-up contribution” is an extra amount that employees age 50+ can contribute to their retirement accounts in addition to the standard 402(g) contribution limit. The IRS determines the annual limit of catch-up contributions each year. Catch-up contributions may be made into 401(k), 403(b), 457(b) government and other certain retirement plans.
What are higher catch-up contributions?
SECURE 2.0 Sec. 109 expanded catch-up contributions to allow a higher limit or what many plan administrators are calling “super” catch-up contributions beginning in 2025. Super catch-up contributions provide an opportunity for a group of employees ages 60, 61, 62, and 63 to maximize their retirement savings by increasing the annual limit of catch-up contributions. A super catch-up contribution is not a different or separate contribution. It simply allows a higher catch-up limit for those allowed.
The increased limit of a super catch-up contribution is the greater of $10,000 or 150% of the regular catch-up contribution for the calendar year. Based on the 2024 catch-up limit, 150% of $7,500 is greater than $10,000 so the super catch-up limit would be $11,250. The $10,000 will be adjusted annually beginning in 2026.
Applicable catch-up contribution limits [assume 2024 limits throughout this document]
2025 Tax Year |
Catch-up Contribution Limit |
Super Catch-up Contribution Limit |
|
What is the amount? |
$7,500 |
$11,250 [$7,500 x 150%] |
|
Who is eligible? |
Employees aged 50-59 and 64+ |
Employees aged 60-63 only |
|
What is the total contribution allowed? |
$30,500 [$23,000 regular contribution + $7,500 catch-up contribution] |
$34,250 [$23,000 regular contribution + $11,250 catch-up contribution] |
|
Subject to 415 limits? |
No |
No |
|
Subject to ER match |
No |
No |
Note: Employees under age 50 cannot make catch-up or super catch-up contributions.
Sec. 109 of SECURE 2.0 did not mandate super catch-up contributions. This means that if a plan allows catch-up contributions, it does not have to allow super catch-up contributions. Most plan administrators plan on offering an “opt-out” feature for those who do not wish to make super catch-up contributions. Specifics are still under consideration.
Fuse will support super catch-up contributions starting in 2025. These contributions will be permitted for ALL employees ages 60-63 who elect catch-up contributions and are participating in a 401(k), 403(b), or 457(b) governmental plan. Super catch-up contributions do not apply to 457(b) plans of tax-exempt employers.
Age Determination:
Fuse Payroll plans to implement a systematic solution specific to employees who reach age 60 but not age 64 before the close of a taxable year (12/31). Employees must be aged 60-63 on the last day of the calendar year to be eligible to make super catch-up contributions for the entire calendar year. The current age logic used to determine employees age 50+ who are eligible for regular catch-up contributions will support this.
Birth Year |
Contribution Year |
Age at 12/31/2025 |
Super Catch Up? |
|
1961 and prior |
2025 |
64 |
No |
|
1962 |
2025 |
63 |
Yes |
|
1963 |
2025 |
62 |
Yes |
|
1964 |
2025 |
61 |
Yes |
|
1965 |
2025 |
60 |
Yes |
|
1966 and later |
2025 |
59 |
No |
All other catch-up eligible employees outside the 60-63 age group will continue to be allowed to contribute up to the regular catch-up limit only.
Super Catch-up Limit Determination:
Fuse Payroll will update our deduction contribution limit tables for Catch-Up contributions for those ages 60-63, as we currently handle the annual contribution limits issued by the IRS. The table below illustrates the logic that will derive the super catch-up limit.
Assume 2024 amounts: $7,500 [Regular Catch-up Limit] x 150% = $11,250 [Super Catch-up Limit]
Catch-up limits: Catch-up Contributions and Limits (assume 2024 limits) |
||||
|
Employee ages |
-49 |
50-59 |
60-63 |
64+ |
|
Amount of Catch-up Limit |
$0 |
$7,500 |
$11,250 |
$7,500 |
→ All employees aged 49 and under will not be allowed to make catch-up contributions.
→ The year an employee reaches age 50 by 12/31, Fuse will allow regular catch-up contributions.
→ The year an employee reaches age 60 by 12/31, Fuse will allow super catch-up contributions.
→ The year an employee reaches age 64 by 12/31, Fuse will only allow regular catch-up contributions.
Employee Actions:
- Employee actions may or may not be taken depending on how they elect or are set up with catch-up contributions.
- Employees are ultimately responsible for their catch-up contributions and would elect their catch-up contribution amount or limit, up to the appropriate catch-up limit based on their age.
- Note: if an employee elects a catch-up amount over the regular catch-up limit but is outside the 60-63 age group, age logic will prevent them from exceeding the regular catch-up limit.
- Employee actions will vary depending on your plan, type of deduction, and how catch-up elections are made (i.e.: consecutive, consecutive maximum, concurrent, flat dollar amounts, percentages, etc.)
Employer Actions:
- Employers do not have to take any actions to initiate this functionality. It will trigger based on the employee’s age. Super catch-up logic will then allow employees in the 60-63 age group to exceed the regular catch-up limit and continue making catch-up contributions up to the super catch-up limit.
- Employers may have to modify employee elections in Fuse based on employee actions taken to modify catch-up limits described above if employees don’t want to make catch-up contributions up to the super catch-up limit or at all.
- Please consult with your plan administrator to coordinate opt-out actions and confirm how employee election modifications will best be handled.
Next Steps:
As of October 2024, Fuse Payroll has not completed super catch-up limit updates to production. Once the IRS releases the annual contribution limits for 2025, we will make the appropriate changes to the deduction tables.
Frequently Asked Questions
Is Fuse prepared to support the Secure 2.0 super catch-up limit for ages 60-63 years old?
Yes. The Fuse system will be fully prepared to support the super catch-up limit ahead of 2025. Once the IRS releases the 2025 contribution limits, applicable deduction contribution tables will be updated and ready for 2025.
How will the Secure 2.0 2025 provision, super catch-up contributions for employees aged 60 to 63 will be addressed by the Fuse system?
The increased contribution limits for employees aged 60-63 will be managed on the backend using the same contribution limit tables currently in use and updated when the IRS releases their annual contribution limits. Eligible employees who wish to contribute the additional amounts should update their deduction amounts for the year to max out their contributions, including catch-up contributions. Employer retirement plan profiles should already be configured to allow for these catch-up contributions.
Are super catch-up contributions for ages 60-63 mandatory?
No. As with the current age 50+ catch-up contributions not being mandatory, age 60-63 catch-up super catch-up contributions are not mandatory either. Plan Administrators prefer an "opt-out" approach for 2025.
NOTE: Guidance is still needed on whether employers with multiple plans must offer super catch-up contributions or can make it available on a plan-by-plan basis.
What is the super catch-up Limit for 2025?
According to the SECURE 2.0 provision, Sec. 109, the limit is “the greater of $10,000 OR an amount equal to 150% of the dollar amount which would be in effect for 2024.” The 2024 amount is $7,500.
NOTE: There is a draft bill pending in Congress to revise the limit to be 150% of the Age 50+ Catch-Up contribution in 2025. The 2025 catch-up limit has not yet been announced.
What happens when an employee reaches age 60?
After the calendar year an employee reaches age 60, they will be able to make catch-up contributions beyond the 50+ catch-up limit up to the super catch-up limit if they choose to do so. Functionality will not permit employees outside the 60-63 age group to contribute beyond the 50+ catch-up limit.
What happens when an employee reaches age 64?
After the calendar year an employee reaches age 64, they will automatically revert to using the age 50+ catch-up contribution limit. Employer configuration actions are not necessary.
Does the super catch-up limit apply to Roth plans?
Yes. The super catch-up limit applies to 401k, Roth 401k, 403b, Roth 403b, 457 governmental, Roth 457 governmental, SIMPLE and Roth SIMPLE plans.
If the catch-up contribution option is not selected in the Retirement Plan Profile by an employer, will the system still allow employees to exceed standard contribution limits?
The system is designed to use the employee’s age and employer retirement plan settings to manage catch-up contributions. If the plan allows catch-up contributions, a checkbox should be marked on the retirement plan profile. If the employer uses a separate deduction code for catch-up contributions instead of setting up the retirement profile accordingly, the client will need to manually input the maximum contribution amount.
Using the retirement plan profile setup is recommended as a best practice to streamline this process and ensure accurate management of contributions.
How does an EMPLOYEE opt-out of the super catch-up limit?
Employees are ultimately responsible for their catch-up contributions. Employees opt out of super catch-up contributions by modifying their contribution election to an amount or percentage they desire, if any. This is the same practice used to opt-out or reduce their 50+ catch-up limit.
How does an EMPLOYER opt-out of the super catch-up limit?
Again, employees are ultimately responsible for their catch-up contributions. Opting out of super catch-up contributions will be accomplished in the same manner as opting out of 50+ catch-up contributions (see Q9). Please consult with your plan administrator about disallowing super catch-up contributions and how to communicate this to your employees.