4 Key Retirement Updates in 2025—Must Know!
The retirement landscape is ever-changing and this year is no different! Here are four updates you’ll want to know!
“ The Times They Are A-Changin' “
If you’ve paid attention to the retirement landscape the last few years, you’ll know that significant changes have taken place, first with the SECURE Act of 2019 and followed by SECURE 2.0 of 2022. Oh, and thanks Bob Dylan for the title!
The following four updates have you in mind. They are designed to help you save more, comply with new rules and regulations surrounding inherited retirement accounts, and even recover lost accounts.
Here are the highlights:
"Super" Catch-Up Contributions for Ages 60-63
One of the most exciting updates for those nearing retirement is the introduction of a "super" catch-up contribution.
If you’re between the ages of 60 and 63, you can now contribute an additional $3,750 to your 401(k) or similar employer-sponsored retirement plan.
In 2024, someone of this age range could contribute a maximum employee deferral amount of $23,000 plus a catch-up contribution of $7,500 for being over the age of 50, for a total of $30,500.
Beginning in 2025, this individual may contribute an employee deferral amount of $23,500 (increased $500 from last year) plus their $7,500 catch-up and then an additional $3,750 for a grand total of $34,750.
For individuals in this age group, it’s a chance to make up for any lost time or supercharge their retirement accounts prior to exiting the workforce.
Your income will depend on if the catch-up and super catch-up are made on a pre-tax or after-tax basis. Either way, extra savings in tax-advantaged accounts are never a bad thing!
Automatic Enrollment for New 401(k) Plans
Another significant change coming in 2025 is the mandatory automatic enrollment provision for newly established 401(k) plans. Under this rule, employers must automatically enroll eligible employees in the company’s retirement plan, with a default contribution rate starting at 3% of their salary. This rate will gradually increase over time, encouraging consistent savings behavior.
This change is designed to help employees build their retirement savings without requiring them to take action. Research has shown that automatic enrollment significantly increases participation rates in workplace retirement plans, particularly among younger workers and those who might not otherwise opt in. For employees, this means you’ll start saving for retirement earlier, and thanks to compounding growth, even small contributions can grow substantially over time. Employers, on the other hand, may need to update their policies and systems to comply with these new requirements.
If you’re starting a new job or your employer is introducing a 401(k) plan in 2025, be sure to review the default contribution rate and consider increasing it if possible to maximize your savings potential.
Clarity on Yearly RMDs for Inherited Retirement Account After 2019 By “Non-Eligible” Designated Beneficiaries
Did you get all of that?? Yeah, most people haven’t just yet.
Required minimum distributions (RMDs) have been a massive source of confusion.
Especially for “non-eligible” designated beneficiaries—such as adult children who inherit an IRA.
In 2025, the IRS has clarified that beneficiaries must now take annual RMDs over the 10-year distribution period, rather than deferring withdrawals until the final year. This change aims to ensure consistent withdrawals and compliance with tax laws.
For beneficiaries, this clarification eliminates uncertainty and provides a clearer framework for managing inherited accounts. However, it also means that beneficiaries need to plan carefully to avoid unexpectedly high tax bills and penalties for non-compliance. Regular withdrawals spread over the 10 years can help mitigate tax burdens and ensure the funds are used efficiently.
If you have an inherited account or you suspect that you will be inheriting one soon, you’ll want to seek guidance to make sure you get this right. Measure twice and cut once!
DOL’s New Retirement Lost & Found
The average number of job changes in a lifetime was estimated to be 12 according to a 2019 Bureau of Labor Statistics (BLS) survey of baby boomers.
This is probably a conservative estimate especially accounting for the younger generations who seem to job hop every year or two.
With a multitude of job changes comes a multitude of old retirement accounts that may easily be “lost” or untracked. As a financial planner, I see this quite regularly.
To address this issue, the Department of Labor (DOL) has launched a "Retirement Lost & Found" database in 2025. This tool will help individuals locate forgotten accounts from past employers, making it easier to recover and consolidate retirement savings.
The new database is a game-changer for retirees and workers alike.
To prepare, gather any old employment records and retirement plan statements you may have. Having this information on hand can make the process of locating lost accounts even smoother.
The website is located here.
What These Changes Mean for You
We see changes like this every year that impact millions of Americans, so you must be constantly staying apprised of the latest retirement and tax updates. Missing out on some of these can be quite costly to you in the long run.
Have any questions about what you’ve read? Let’s talk about them!
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