New 401(k) plan changes take effect in 2025 to boost retirement savings

Starting in 2025, 401(k) plans will see significant changes, including higher catch-up contribution limits for older workers. Those aged 60 to 63 can now contribute up to $37,750, which includes an $11,250 catch-up amount. Additionally, a new auto enrollment requirement mandates that employers enroll eligible employees at a minimum contribution rate of 3%, increasing by 1% each year until reaching 10%. Some small businesses and certain plans are exempt from this rule. These changes aim to enhance retirement savings opportunities for Americans, particularly for older workers. Employees can opt out of auto enrollment but are encouraged to participate for better savings outcomes.