Several important changes to 401(k) plans could reshape how workers save for retirement. Thanks to provisions in the
These updates could help workers save more for retirement and better prepare them for the future. Understanding these changes to 401(k) plans in 2025 can help you make the most of new opportunities to build your retirement savings.
2025 contribution limits: What you can put away
Retirement savers will have more opportunities to boost their 401(k) contributions in 2025. Thanks to annual cost-of-living adjustments and changes under the SECURE 2.0 Act, the maximum amount employees can contribute to a
The 401(k)
For workers 50 years and older, the standard
How much can I contribute to my 401(k)?
These updated limits give retirement savers the chance to set aside more pre-tax dollars each year, helping to take advantage of tax benefits and the power of
- If you're under age 50. You can contribute up to $23,500 to a 401(k) starting in 2025.
- If you're 50 or older. You can contribute up to $31,000, which includes a $7,500 catch-up contribution.
- If you're between the ages of 60 and 63. You can contribute up to $34,750, including an enhanced $11,250 catch-up contribution.
For those who have flexibility in their budget, aiming to contribute the maximum—or at least enough to qualify for any available employer match—can be a powerful strategy to
Increased catch-up contributions for ages 60–63
Starting in 2025, workers between the ages of 60 and 63 will have a new option to contribute even more to their retirement savings. The
Employees age 60 to 63 can contribute
Similar updates apply to
For workers approaching retirement, maximizing these new
Mandatory auto-enrollment for new plans
Instead of requiring employees to opt into retirement plans, new
Employees still will have the flexibility to opt out or adjust their 401(k) contribution rate if they choose. For employers, offering automatic enrollment can increase overall participation rates and help employees build stronger financial futures. Plans created before December 29, 2022, and certain small or new employers are exempt from these requirements.
Part-time employee participation in retirement plans
Another important change in 2025 will improve access to savings plans for part-time workers. Under the SECURE Act 2.0, long-term, part-time employees will be eligible to participate in their employer's retirement plans after completing two consecutive years of service with at least 500 hours worked each year. Previously, the requirement was three years.
This change means more part-time workers will have the opportunity to save for retirement through employer-sponsored plans like 401(k)s. It's a step toward increasing retirement plan access among a broader range of employees, including those with reduced schedules—a path for many during their early retirement years.
What is automatic portability in retirement plans?
Changing jobs can come with the challenge of managing
Under the new guidelines, if you leave a job with a retirement account
Without automatic portability, small balances often get pushed into low-interest custodial IRAs or cashed out entirely. Some key benefits of automatic portability for employees include:
- Streamlines the
401(k) rollover process during a job change, making it easier to stay on track - Consolidates your accounts so your dollars can grow uninterrupted long term
- Reduces your chances of forgetting about old accounts
- Makes it less likely you'll cash out early, which may trigger unexpected taxes and penalties
For employers, automatic portability can lead to fewer inactive accounts to manage, less fiduciary risk from abandoned accounts and reduced fees and complexity tied to managing large participant lists.
How does student loan matching work in a 401(k)?
Balancing student loan repayments with retirement savings can be challenging. To help, the SECURE Act 2.0 includes a new provision, effective for plan years starting after December 31, 2023, that gives employers the option to match
That means if you're paying off student loans, you still can get an employer match in your retirement plan—even if you're not contributing to it directly. The payments must be for
This change provides a way to keep growing your retirement savings even if your budget is tight, especially early in your career when many still are managing student loan debt. For example, a recent grad focused on paying off loans may not have extra cash for retirement, but with this new rule, they still can get a match and start building long-term savings.
Long-term: The RMD age will rise to 75 (eventually)
The SECURE 2.0 Act brings major changes to
Roth IRAs aren't subject to RMD requirements during the account owner's lifetime since the money already has been taxed. Starting in 2024,
New 401(k) changes give savers more flexible financial options
Higher contribution limits, expanded catch-up contributions, automatic enrollment and student loan matching all help make it easier to build your retirement savings in 2025. Long-term changes, like raising the RMD age, also provide more flexibility down the road.
Contributing to your 401(k) consistently each year is one of the best opportunities to add to your retirement savings. Talk with a