Each year, retirement savings rules change, but even when the modifications are small, they may affect you and your retirement plans. It’s helpful to assess how those amendments may apply to your organization’s retirement plans like 401(k)’s and 403(b)’s, and both traditional and Roth IRAs.
The SECURE 2.0 Act, enacted in 2022, made it easier for workers to save for retirement and for employers to offer retirement plans. If you can afford to increase your contributions to retirement plans, you will reap two tax benefits:
1) lowering your taxable income even more and,
2) growing your savings tax deferred. Since contributions to your 403(b) come directly from your salary and are made with pre-tax dollars, your taxable salary decreases.
In 2025, some modifications to this law may change how people build their nest eggs. Understanding these changes is crucial for maximizing your retirement savings, optimizing tax advantages, and positioning yourself for a financially secure retirement.
Let's look at the most significant amendments to the Secure 2.0 Act. In 2025, savers will benefit from an increase in retirement contribution limits for various types of accounts:
Other new retirement savings provisions for 2025 are enhanced catch-up contributions for older employees. If you are between the ages of 60 and 63, you may be eligible to contribute up to $11,250 to your 401(k) or 403(b), if permitted by your plan. For those nearing retirement and looking to increase their retirement savings, this is particularly useful.
On the student loan side, employers can now match student loan payments with retirement plan contributions to an employee’s retirement account. This match helps staff build retirement savings while paying off debt. For example, if an employee is paying $200 per month towards his/her student loan, the employer can match that $200 into a retirement plan, like a 403(b) or 401(k).
The 2025 regulation updates introduce new opportunities to save more, optimize tax benefits, and plan better for your financial future, whether you are approaching retirement or looking to maximize catch-up contributions. If you have questions about what’s best for you, consult a financial planning professional to help you sort through your options. Remember, MMBB members can access our financial planning specialists at no cost as a benefit of membership.
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