‘Super catch-up’ contributions for retirement plans

Key takeaways:

• Provisions in the SECURE 2.0 Act allow individuals to make super catch-up contributions to their retirement plans.
• Individuals aged 60 to 63 years can participate in these higher catch-up contributions.

Reaching a comfortable retirement is the number one financial goal for nearly all physicians.

To that end, qualified retirement plans can play a major role. Any new opportunity in qualified retirement planning is noteworthy for all doctors, especially for those nearing retirement. In this article, we highlight one such planning opportunity.

Beginning in 2025, individuals aged 60 to 63 years are able to make enhanced “super catch-up” contributions to their retirement plans thanks to provisions in the SECURE 2.0 Act. This initiative aims to bolster retirement savings for those nearing retirement age.

Catch-up contribution basics

Physicians older than 50 years are probably already familiar with catch-up contributions. These are extra amounts physicians aged 50 years or older are allowed to contribute to their 401(k), 403(b) or 457 retirement plans. For example, in 2025, the standard catch-up contribution is $7,500, allowing physicians to exceed the regular contribution limit of $23,500 and save up to $31,000 in total.

But beginning in 2025, the SECURE 2.0 Act introduces a higher catch-up contribution limit specifically for individuals aged 60 to 63 years. These super catch-up contributions permit eligible participants to contribute the greater of $10,000 or 150% of the standard catch-up limit. Given the current catch-up limit of $7,500, this translates to a super catch-up limit of $11,250 (ie, $7,500 x 150%). Consequently, individuals in this age bracket can contribute up to $34,250 annually to their retirement plans, combining the regular deferral limit and the super catch-up contribution.

401(k), 403(b) and Governmental 457(b) plans: The 401(k), 403(b) and governmental 457(b) super catch-up applies to eligible plan participants who are between the ages of 60 and 63 years. The deferral limit is the greater of $5,000 or 150% of the normal “age 50 year” catch-up contribution limit for 2025 ($7,500). Thus, the 2025 super catch-up equals $11,250 (150% x $7,500). This limit will be indexed for inflation starting in 2026.

Savings Incentive Match Plan for Employees IRAs: The Savings Incentive Match Plan for Employees (SIMPLE) IRA super catch-up applies to eligible account owners who are between the ages of 60 and 63 years. The deferral limit is the greater of $5,000 or 150% of the 2025 regular “age 50 year” catch-up limit for SIMPLE IRAs ($3,500). Thus, the 2025 SIMPLE IRA super catch-up equals $5,250 (150% x $3,500). This limit will be indexed for inflation starting in 2026.

Eligibility, plan participation

To qualify for these enhanced contributions, participants must be between the ages of 60 and 63 years at any point during the calendar year.

It is important to note that while the SECURE 2.0 Act permits these increased contributions, implementing them is optional for employers. Therefore, individuals should consult with their plan administrators to determine if their specific retirement plan offers the super catch-up provision.

Other retirement catch-up changes

The SECURE 2.0 Act also introduces a Roth requirement for catch-up contributions made by high-income earners. Beginning in 2026, employees earning more than $145,000 annually (adjusted for inflation) who are 50 years and older must make their catch-up contributions to a Roth account within their retirement plan.

This means contributions must be made with after-tax dollars, but the growth and withdrawals from the Roth account will generally be tax free in retirement. The Roth requirement applies to both standard and super catch-up contributions, impacting how high earners approach their savings strategy.

The SECURE 2.0 Act initially set the Roth requirement for catch-up contributions by high-income earners to take effect in 2024. However, its implementation has been delayed until 2026 due to logistical challenges faced by employers and retirement plan administrators who were unprepared to handle the administrative changes required to accommodate Roth-only contributions.

These adjustments involve updating payroll systems, modifying plan structures and providing clear communication to employees about the changes. In addition, employers highlighted the complexity of determining eligibility for the Roth requirement based on annual earnings, further contributing to the decision to postpone the provision.

Why catch-up contributions matter

The availability of super catch-up contributions is particularly attractive for those who have the financial capacity to maximize their retirement savings in these critical years. For example, a couple where both partners are eligible for super catch-up contributions could contribute nearly $70,000 in total to their workplace plans in 2025. This level of contribution can make a significant difference in retirement readiness.

Here is how you can determine if super catch-up contributions are right for you:

• Determine contribution levels: Assess your cash flow and savings goals to determine how much you can realistically contribute.
• Evaluate traditional vs. Roth contributions: Analyze your current tax situation and future income projections to decide which type of contribution — traditional or Roth — makes the most sense.
• Navigate plan rules: Ensure you understand the specific provision of your workplace plan for catch-up and super catch-up contributions.

Steps to navigate these changes

Individuals approaching the age of 60 years should review their retirement savings strategies considering these upcoming changes. It is advisable to consult with your financial advisor and plan administrators to understand how to maximize contributions under the new provisions and to ensure that their retirement plans accommodate these enhanced contribution limits.

Here are a few steps to consider as you navigate these changes:

• Maximize your super catch-up contribution in 2025: If you are between 60 and 63 years, take full advantage of the $34,750 total contribution limit while you can.
• Plan for the Roth requirement in 2026: If your income exceeds $145,000, start thinking about how Roth contributions fit into your overall tax strategy.
• Consider future tax changes: With potential tax rate increases on the horizon in 2026, it is essential to evaluate how these changes could impact your retirement savings.
• By taking advantage of the super catch-up contributions, eligible individuals can significantly enhance their retirement savings during a critical period leading up to retirement.

References:

Good news for people who make $145K: IRS delays new catch-up contribution rule until 2026. https://smartasset.com/retirement/irs-delays-catch-up-contribution-rule-2026. Published Aug. 29, 2023. Accessed March 5, 2025.

Mandell and OJM Group partners are pleased to announce the 2024 publication of our newest book, Wealth Strategies for Today’s Physician: A Multi-Media Playbook. The playbook’s innovative format features more than 90 links to videos and podcast episodes to enhance important financial topics for physicians. To receive a free print copy or ebook download, text HEALIO to 844-418-1212, or visit www.ojmbookstore.com and enter code HEALIO at checkout.

For more information:

Sanjeev Bhatia, MD, is an orthopedic sports medicine surgeon practicing at Northwestern Medicine in Warrenville, Illinois. He can be reached at sanjeevbhatia1@gmail.com or @DrBhatiaOrtho.

David B. Mandell, JD, MBA, is an attorney and founder of the wealth management firm OJM Group, www.ojmgroup.com, where Bob Peelman is a partner and director of wealth advisors. They can be reached at 877-656-4362 or mandell@ojmgroup.com.