Catch-Up Contribution
A catch-up contribution is an additional amount that individuals aged 50 or older are permitted to contribute to their retirement accounts above the standard annual limit, designed to help those approaching retirement accelerate their savings.
Catch-up contributions were introduced by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) in recognition that many workers — particularly those who took career breaks, raised families, or started saving late — need an opportunity to build retirement savings more aggressively in the years closest to retirement. The additional amounts are indexed for inflation and adjusted periodically.
For 2025, the catch-up amounts by account type are as follows. For 401(k), 403(b), and most governmental 457(b) plans, the standard catch-up for those aged 50 and older is $7,500, bringing the total deferral limit to $31,000. For IRA and Roth IRA accounts, the catch-up is $1,000 (not inflation-indexed), raising the combined IRA limit to $8,000. For SIMPLE IRA plans, the catch-up is $3,500, for a total of $20,000.
SECURE Act 2.0 introduced an enhanced catch-up contribution for participants aged 60, 61, 62, and 63 in employer plans. For 2025, this enhanced amount is $11,250 for 401(k), 403(b), and 457(b) plans — replacing the standard $7,500 catch-up for eligible participants and raising their total deferral limit to $34,750. For SIMPLE IRAs, the enhanced catch-up for ages 60-63 is $5,250 in 2025.
SECURE Act 2.0 also contains a controversial provision requiring that catch-up contributions made by high earners (those with wages above $145,000 from the same employer in the prior year) must be directed to a Roth subaccount starting in 2026. This rule was delayed by IRS guidance, but it signals a long-term shift toward Roth catch-ups for higher-income workers.
Catch-up contributions interact with employer matching formulas in various ways depending on plan design. Some matches apply only up to the statutory base limit; others extend the match to catch-up contributions. Participants should review their summary plan description to understand whether catch-up deferrals attract employer matching dollars.