New Retirement Plan Opportunities for 2025
As we head into 2025, several new changes to retirement plan rules could provide opportunities. The SECURE Act 2.0 and other regulatory updates bring new features to 401(k), 403(b), and 457 plans, including new contribution limits, flexible contributions, special catch-up provisions, and tools to help track lost retirement savings. Here’s a closer look at what’s in store and how you can take advantage of these changes.
1. Contribution Limit Increase
The IRS increased the annual contribution limit of plans to $23,500, up from $23,000 in 2024. Unfortunately, the annual catch-up contribution remains the same in 2025, at $7,500. Therefore, employees aged 50 or older with a 401(k), 403(b), or 457 plan can contribute an annual maximum of $31,000.
2. Flexible Employer Match Contributions
In 2025, a new option could give 401(k) participants the ability to direct their employer’s matching contributions into alternative accounts. Instead of the usual 401(k) match, your employer could offer the option to direct those funds to a Health Savings Account (HSA), Health Reimbursement Account (HRA), or an Educational Assistance Program—helping you pay down student loan debt.
While this feature will depend on your employer’s specific plan design, it has the potential to become more widespread in the future. If available, it offers more flexibility to align your retirement savings with your broader financial goals.
3. Special Catch-Up Contribution
The SECURE Act 2.0 introduces a special catch-up contribution opportunity for those aged 60 through 63. While individuals aged 50 and older have long been allowed to contribute additional funds to their retirement plans (highlighted in section 1), starting in 2025, this special catch-up contribution will allow you to contribute 150% of the standard catch-up amount.
This means the regular catch-up limit of $7,500 will increase to $11,250 for those in the 60-63 age range in 2025. This change offers a significant opportunity to accelerate retirement savings and reduce taxable income as you approach retirement age.
4. Automatic Contribution Increases
In 2025, some 401(k) plans will automatically increase your contribution rate each year. While this can be a great way to boost your retirement savings over time, it’s important to note that this change may affect your monthly cash flow. The auto-increase feature will raise your contribution by a set percentage annually, but you will have the option to opt out if you prefer to manually set your contribution rate.
5. “Retirement Savings Lost and Found” Database
Later in 2025, the Department of Labor is expected to launch a new tool aimed at helping individuals track down “forgotten” retirement accounts. If you’ve worked for multiple employers or changed jobs over the years, you may have retirement savings sitting in old plans that are hard to track. This new database will help you locate those accounts and consolidate them into your current retirement plan, making it easier to manage your savings and avoid leaving money behind.
How These Changes Impact You
These new opportunities could impact your plan. If you’re interested in exploring how these changes could apply to you, we encourage you to reach out to us at Heritage Wealth Architects. Our team is here to help you navigate these updates and ensure your decisions align with your goals.
If you’re already a HWA client, we recommend you send your team any communications or documentation you receive from your employer regarding these updates. Our team is happy to help you understand how these changes might affect your retirement plan and to answer any questions.
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