Interested In The New 'Super-Funding' 401k Opportunity? Here's How To Know If You Qualify

• 401(k) funding changes for 2025 now allow investors of a certain age to contribute $11,250 in catch-up funds

• This super-funding opportunity is available to investors ages 60-63

• The changes are good news for Gen X’ers in particular, as only 54% believe they are financially prepared for retirement

The IRS has introduced some 401(k) funding changes for 2025 that allow older investors to contribute additional funds to their plans.

According to a survey by Northwestern Mutual, Americans need $1.26 million to retire comfortably. Among Gen X’ers, who are approaching their retirement years, only 54% believe that they will be financially prepared for retirement when the time comes.

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Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo, told CNBC these new changes are a “super-funding” opportunity for older investors, offering them an opportunity to catch up.

What exactly the changes are, and who qualifies for them, hasn’t been entirely clear. Catherine Valega, a CFP and founder of Green Bee Advisory, told CNBC, that it will take time for people to become aware of the new opportunities, and that at this point “no one knows about the extra increase.”

So here’s a more precise breakdown of the “super-funding” opportunities and who qualifies for them.

In 2025, the IRS has set 401(k) contribution limits to $23,500 for investors of all ages, up $500 from 2024.

Older contributors, ages 50 and up, can contribute an additional $7,500 in “catch-up contributions” to their 401(k). This totals out to $31,000 for the year, a cap that remains unchanged since 2024.

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But for contributors who are 61, 62, or 63, a change under the Secure 2.0 Act of 2022 has increased the catch-up contributions from $7,500 to $11,250. This means that the total cap for investors in their early 60s sits at $34,750 for 2025.

It’s important to note that the age eligibility is determined by how old you’ll be by Dec. 31. So if you’re 59 at the start of 2025 and will turn 60 before year-end, you’re eligible for the increased catch-up contributions. However, if you’re currently 63, turning 64 by the end of December, you are not eligible.

Dan Galli, a CFP and owner of Daniel J. Galli & Associates, told CNBC that the higher 401(k) catch-up rates are “a great tool in the toolbox.” However, they’re not ones that many people are using. According to data from Vanguard’s “How America Saves” report, only 15% of eligible employees utilized these catch-up options in 2023.

Fidelity told the outlet that 3% of retirement plans haven’t added the feature for 2025, meaning catch-up contributions will stop at $7,500. So it’s important that you speak to a financial advisor if you plan to take advantage of the change to ensure you’re able to make the most of it.

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