Maximize Retirement Savings: Don’t Overlook Catch-Up Contributions 

By: Tzinberg & Associates, P.C. 

As retirement approaches, many older Americans seek strategies to maximize their savings and ensure financial stability. One of the most effective yet often overlooked tools is the “catch-up contribution.” Catch-up provisions allow workers nearing retirement age to make additional contributions beyond standard limits, helping to close savings gaps and build stronger financial security. 

This article outlines the 2025 contribution and catch-up rules for several major retirement plans — including SEP, SIMPLE, 401(k), and 403(b) plans — and highlights additional strategies to boost retirement readiness. 

 

Simplified Employee Pension Plans (SEP IRAs) 

SEP IRAs offer a straightforward, tax-advantaged way for self-employed individuals and small-business owners to save for retirement. Contributions are tax-deductible, and investments grow tax-deferred, allowing long-term accumulation. 

Unlike 401(k) and SIMPLE IRA plans, SEP IRAs do not include a separate “catch-up” contribution provision for participants age 50 or older. However, they feature high contribution limits, providing substantial savings capacity regardless of age. 

For 2025, the SEP IRA contribution limit is the lesser of 25 percent of eligible compensation or $70,000, subject to official IRS confirmation. This elevated limit effectively allows older workers to contribute more in absolute terms, even without a formal catch-up mechanism. 

 

Savings Incentive Match Plan for Employees (SIMPLE IRAs and SIMPLE 401(k)s) 

For 2025, employees may defer up to $16,500 into a SIMPLE IRA or SIMPLE 401(k). Participants aged 50 or older may contribute an additional $3,500 as a standard catch-up, bringing their total elective deferral limit to $19,000. 

Beginning in 2025, under the SECURE 2.0 Act, participants who are age 60, 61, 62, or 63 by December 31 may qualify for an enhanced “super catch-up.” The additional contribution limit for these individuals is the greater of $5,000 or 150 percent of the standard age-50+ catch-up limit, which equals $5,250 for 2025. Thus, eligible individuals could contribute up to $21,750 ($16,500 + $5,250) to their SIMPLE IRA or SIMPLE 401(k) plan if their employer adopts the new rule. 

Eligibility is determined by the participant’s age as of December 31. Those turning 60 by year-end qualify; those turning 64 do not. 

Employer contributions are mandatory under SIMPLE plan rules and must be one of the following: 

1. Matching Contribution: Dollar-for-dollar match of employee deferrals up to 3 percent of compensation. 

2. Non-Elective Contribution: Employer contributes 2 percent of each eligible employee’s compensation, regardless of employee deferrals. 

 

Deferred Income Arrangements (401(k) Plans) 

A 401(k) plan, formally a cash-or-deferred arrangement under IRC § 401(k), allows employees to defer a portion of salary into a tax-deferred retirement account. 

For 2025, the standard elective deferral limit is $23,500. Participants aged 50 or older may make a catch-up contribution of $7,500, raising the total potential deferral to $31,000. 

Beginning in 2025, participants aged 60 through 63 by December 31 may be eligible for an enhanced “super catch-up” under the SECURE 2.0 Act. The limit for these individuals is the greater of $10,000 or 150 percent of the standard catch-up amount, which equals $11,250 for 2025 — bringing their total potential elective deferral to $34,750 if their plan permits it. 

Note: Employer plans must elect to adopt this provision; it is not automatic. Additionally, starting in 2026, employees with prior-year wages exceeding approximately $145,000 (indexed for inflation) must make all catch-up contributions as Roth (after-tax) deferrals. 

 

Tax-Sheltered Annuities (403(b) Plans) 

403(b) plans — often called Tax-Sheltered Annuities (TSAs) — are retirement plans for employees of public schools, nonprofits, and certain religious organizations. 

For 2025, participants may defer up to $23,500, plus an additional $7,500 catch-up if aged 50 or older, for a total of $31,000. 

Long-term employees with at least 15 years of service with the same qualifying employer may be eligible for an additional 15-Year Rule catch-up of up to $3,000 per year (subject to lifetime and plan limits). 

The SECURE 2.0 Act also extends the enhanced “super catch-up” for participants aged 60-63 to 403(b) plans. Eligible participants may contribute the greater of $10,000 or 150% of the standard catch-up limit — $11,250 in 2025 — for a total of $34,750 if their plan adopts this provision. 

 

Other Tax-Advantaged Retirement Strategies 

Health Savings Accounts (HSAs): 
HSAs offer a rare triple tax benefit — contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. After age 65, withdrawals for non-medical expenses are penalty-free (but taxable as income), allowing flexibility similar to a Traditional IRA. HSAs can serve as a valuable supplemental retirement vehicle for those with high-deductible health plans. 

Roth IRAs and Roth Conversions: 
Roth IRAs grow tax-free and do not require required minimum distributions (RMDs) during the owner’s lifetime. Older workers may also use strategic Roth conversions — transferring funds from Traditional IRAs or 401(k)s to Roth accounts — to reduce future taxable RMDs and create tax-free retirement income later. 

IRA Contributions Beyond Age 70½: 
Prior to the SECURE Act of 2019, individuals aged 70½ and older could not contribute to Traditional IRAs. This restriction has been eliminated; now, anyone with earned income may continue to contribute regardless of age, expanding opportunities for older Americans to rebuild savings. 

 

Final Thoughts 

Maximizing retirement contributions — especially through available catch-up opportunities — can meaningfully increase retirement security for those approaching their golden years. With higher limits taking effect in 2025 under SECURE 2.0, it’s an ideal time to review your plan options, verify eligibility, and coordinate with your tax advisor to fully capitalize on these opportunities. 

---

Under U.S. Treasury regulations, any tax advice in this communication is not intended or written to be used to avoid IRS penalties. Tzinberg & Associates provides this information for general guidance only. It does not constitute tax advice, accounting services, investment advice, or professional consulting. Consult a professional adviser before making decisions or taking action, as the information is provided "as is" without any warranties regarding its completeness, accuracy, or timeliness.