The implementation of the Secure Act 2.0 has been a slow but steady one. Enacted into law in 2022, it made some significant changes to how retirement accounts work. Most of the changes have not been put into effect yet, as they are meant to be gradual so as to allow for a smoother implementation, but some of of the IRA specific measures will be going into effect in 2025 and it will be important for affected individuals to be aware of them so that they can make the most of their retirement accounts.

Given the potential shortfall of Social Security, it is now more important than ever to ensure that personal savings are on par with what they would need to live a comfortable life during retirement. To that end, the Internal Revenue Service has started to implement the Secure Act 2.0 measures.

These measures will attempt to improve the way workers save their money for retirement, eliminating as many barriers as possible to make it easier for, especially older Americans, to contribute to their accounts as much of their paychecks as they can possibly spare. While in investments longevity seems to be the easiest and most efficient way to grow money, the next best thing is to up your contributions as much as possible without it affecting your current lifestyle.

To ensure that these extra contributions are made in the most efficient way possible, these are the changes implemented to aid with retirement accounts in 2025:

Larger catch-up contributions for older workers

Whether you’re self-employed or work for a small business with SIMPLE IRA accounts, the rule that states how “catch up contributions” work is changing in 2025. Currently, SIMPLE IRAs already allow extra contributions for people 50 and older (in 2024, the limit was set to $16,000 for employee contributions, with an additional $3,500 for those 50+) but in 2025 these amounts are increasing.

Another change will apply for workers who are 60 to 63 years old. They will now be allowed to make an extra “catch up contribution” of $5,000 or 150% of the standard SIMPLE IRA catch-up contribution, whichever amount is higher for their retirement. A further step will be taken in 2026, indexing this contribution for inflation to account for the increase in cost of living. A similar change is happening for 401(k)s for those aged 60-63, increasing the catch-up contribution to $10,000 or 150% of the regular catch-up limit, whichever is higher.

IRA catch-up contributions will be linked to inflation

While technically this rule was already implemented in 2024, there were no changes associated with it. For those who do not know, there are two IRA contribution limits each year, one for everyone called the standard contribution limit and the catch-up contribution limit that applies to people aged 50 or older.

This catch-up contribution limit tries to ensure that those who are older and have less savings for retirement can make up for lost time by contributing more in the latter years of their careers, when their salaries would be theoretically higher and their expenses lower than those of a young family.

In 2024 the standard contribution limit was set to $7,000 and the catch-up contribution added $1,000, and while the standard IRA contribution limit has been adjusted for inflation for a number of years already, the catch-up limit has been stuck at $1,000. This is all ching in 2025, as the SECURE Act 2.0 included an annual cost-of-living adjustment for the IRA catch-up contribution starting in 2024. The announcement of the new limit has not been made yet, but there is a strong possibility that it will happen and that it will continue to rise for years to come.

Note: Thank you for visiting our website! We strive to keep you informed with the latest updates based on expected timelines, although please note that we are not affiliated with any official bodies. Our team is committed to ensuring accuracy and transparency in our reporting, verifying all information before publication. We aim to bring you reliable news, and if you have any questions or concerns about our content, feel free to reach out to us via email. We appreciate your trust and support!