Professional Standards Committee Highlights - Preparing for the Super Catch-Up Contribution

Starting January 1, 2025, a new optional provision under the SECURE 2.0 Act allows retirement plan participants to defer an additional 50% of the permissible Age 50 Catch-Up contribution, also referred to as the "super catch-up" contribution, during the calendar years when participants turn 60, 61, 62, or 63. This change is designed to help individuals nearing retirement maximize their savings during these critical years.

The super catch-up contribution applies to 401(k), 403(b), and 457(b) plans. Some deferred compensation plan providers are proactively incorporating this provision, while others are offering it on an opt-in basis.

Employers should coordinate with payroll departments to confirm whether their systems can accommodate the new contribution limits. Ensuring seamless implementation will help minimize administrative challenges and allow participants to fully benefit from the provision.

It is essential that finance officers determine their plan’s approach—whether to opt in or opt out—and promptly notify their deferred compensation plan provider.

By taking early action and collaborating with payroll, you can ensure compliance and support your employees’ retirement readiness.

The Internal Revenue Service has published guidance on this new provision, as well as other changes set to take effect in 2025, which can be found here: https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000.

If you have questions regarding this topic, contact Donna K. Lee, Chair of the Professional Standards Committee at standards.chair@csmfo.org.

The Professional Standards Committee operates as a technical resource to CSMFO members. The Committee is comprised of municipal and commercial members whose mission is to keep members informed of emerging issues and best practices.