By Michael Berkhahn, CFP®
New retirement laws this year are poised to impact how individuals plan for their golden years. The Secure 2.0 Act, a federal law that aims to help Americans save more money for their retirement, contained several provisions that have been phased in over the past few years and 2025 is no different. Whether you’re looking to boost your savings or navigate new rules, below is a breakdown of the key changes you should be aware of as you consider your retirement strategies.
1. Supersized Contributions for Ages 60–63
A pivotal change for 2025 involves special provisions for individuals between the ages of 60 and 63. Workers over the age of 50 are allowed to make an additional catch-up contribution of $7,500 into employer plans. Starting this year individuals between the ages of 60 and 63, can make a supersized contribution of an additional $3,750, bringing their total catch-up contribution to $11,250.
This provision could be a game-changer for those who are behind on their retirement savings or want to make a final push toward a comfortable retirement.
2. Simple IRA Catch-Up Contributions for People Aged 60 to 63
For individuals who participate in a Simple IRA, you also benefit from the new catch-up contribution rules for individuals aged 60 to 63. Under the new guidelines, people in this age range can contribute an additional $5,250 to their Simple IRA.
Related: Recession-Proof Your Retirement Budget
3. Mandatory Automatic Enrollment Contribution Arrangements
Starting in 2025, new rules require 401(k) and 403 (b) plans that were established after Dec. 29, 2022 to be automatically enroll eligible employees into their retirement plans. The initial contribution rate must be at least 3% of the employee’s pay and automatically increases the contribution rate by one percent each year until it reaches at least 10%. While employees can opt-out or adjust the contribution rate, this automatic enrollment feature aims to increase participation in retirement plans and help more individuals save for retirement.
4. Retirement Savings Lost and Found Database
The Employee Benefits Security Administration “EBSA” is launching a new public database to help individuals locate lost or forgotten retirement accounts. This centralized database will allow people to track down retirement funds they may have left behind at previous employers, or that may have been transferred to different institutions over the years.
If you’ve ever worried about an old retirement account or have lost track of one, this new tool will be invaluable. It’s an excellent opportunity for individuals to find hard-earned retirement funds that could be sitting untouched.
Conclusion
While the SECURE 2.0 Act’s new laws and regulations may seem confusing at first, they were created to help you save more money as your approach your final working years by providing several opportunities to enhance your retirement savings.
As always, it’s smart to consult with a financial advisor while navigating these changes so you can ensure that you’re taking full advantage of the new laws. Also be aware that the Trump administration’s changes at the federal level may affect any or all of this information.
Michael Berkhahn, CFP®, is Vice President of Graham Capital Wealth Management, an independent Registered Investment Advisor that specializes in providing investment management strategies for high net-worth families, foundations and pension plans.
