Retirement Planning – The Catch Up Provision in the SECURE Act 2.0

The SECURE Act 2.0, a follow-up to the original Setting Every Community Up for Retirement Enhancement (SECURE) Act, includes a provision for catch-up contributions aimed at enhancing retirement savings opportunities for older workers. Specifically, this provision allows individuals aged 62, 63, and 64 to make additional catch-up contributions beyond the standard limits for retirement accounts such as 401(k)s and IRAs. Starting in 2025, these individuals can contribute up to $10,000 more per year to their retirement plans, which will be indexed for inflation. This measure is designed to help those nearing retirement age to bolster their retirement savings more effectively. Additionally, for high-income earners (those earning over $145,000), catch-up contributions must be made to Roth accounts, which are funded with after-tax dollars, ensuring the tax benefits are realized in retirement rather than up front.