Saving for retirement gets more complex as you move into your 50s and early 60s, especially if you are running your own business. The pressure to make the most of your remaining working years is real, but the rules are not always easy to follow.
Important changes are coming soon that could affect how much you are allowed to contribute, how those contributions are taxed, and what your retirement plan needs to include. If you have a Solo 401k or run an S-Corp, it is worth getting familiar with these updates now to avoid surprises later.
This guide walks through what is changing, what may be optional, and how to plan for 2025 with clarity and confidence.
📌 Also read: 10-Year Retirement Planning Checklist: What to Do Before You Retire
2025 Catch-Up Limits and Who Qualifies
If you are an older business owner looking to boost your retirement savings, 2025 offers multiple ways to do it. But how much you are allowed to contribute depends on your age, plan type, and whether your plan includes optional enhancements created under recent legislation.
Below is a breakdown of the standard limits and how the new rules apply across different plan types. These include Solo 401k plans, IRAs, SIMPLE plans, and government 457b.
Standard vs. Enhanced (Ages 60–63)
Most retirement plans still follow the familiar catch-up framework that starts at age 50. But there is now a second, higher catch-up level for a narrow age band — if your plan includes it.
For 2025:
- The standard age-50 catch-up limit remains $7,500 for 401k, 403b, and government 457b plans.
- A new enhanced catch-up applies if you are age 60, 61, 62, or 63 at any point during 2025. This enhanced limit is set at $11,250 for 2025.
📝 Note: The enhanced amount is optional. It only applies if your plan has been amended and properly administered to allow it. This includes Solo 401k plans, which you sponsor yourself.
These two catch-up tiers cannot be used together. If you qualify for the enhanced amount and your plan supports it, that becomes your total catch-up cap. Future years will see this enhanced figure adjusted for inflation.
IRA and SIMPLE Plan Distinctions
Not all retirement plans follow the same rules. If you also contribute to an IRA or SIMPLE plan, different catch-up thresholds apply. These plans are not tied to the 401k family of limits.
IRA Contributions in 2025:
- The total limit is $7,000
- If you are age 50 or older, you may add a $1,000 catch-up, for a total of $8,000
- IRA catch-ups follow separate deadlines and do not interact with workplace plan limits
SIMPLE and SIMPLE 401k Plans:
- SIMPLE deferral limit rises to $16,500 for 2025
- Standard catch-up for age 50 or older remains $3,500
- A new enhanced SIMPLE catch-up is available for ages 60 to 63, set at $5,250 for 2025, if the plan allows it
📝 Note: SIMPLE plans are subject to different administrative and adoption rules. Enhanced catch-ups must be written into the plan, just like with Solo 401k or workplace 401k plans.
How Solo 401k Plans Fit In
Solo 401k owners use the same dollar limits and framework as traditional employer plans, because a one-participant 401k is treated the same under IRC rules.
For 2025:
- The basic employee elective-deferral limit is $23,500
- Total annual additions (employee plus employer, excluding catch-ups) can go up to $70,000
This means older entrepreneurs with a Solo 401k may be able to contribute $81,250 in total, if eligible for the enhanced catch-up and if the plan includes it.
Roth Catch-Up Rules for High Earners
Starting in 2026, many older participants who earn higher wages will no longer have a choice between pre-tax and Roth when making catch-up contributions. These amounts will be required to go into the Roth side of their retirement plan if certain conditions are met.
The IRS has finalized regulations that confirm this shift. A transition period, originally granted under Notice 2023-62, gave plans until the end of 2025 to prepare. That grace period is not being extended. Plan sponsors and administrators will need to be fully compliant by the 2026 plan year.
The rule applies to 401k, Solo 401k, 403b, and government 457b plans. It also depends on the wages you earned in the prior year, not your total income across multiple sources.
How the Wage Test Works
The Roth-only catch-up rule does not apply to everyone. It is based on W-2 wages subject to FICA taxes paid by the plan sponsor in the previous calendar year.
✅ If you earned more than $145,000 in W-2 wages from the sponsoring employer in the prior year, your catch-up contributions must be Roth beginning in 2026
✅ If you had no W-2 wages from that employer, the Roth-only requirement does not apply to you for that year
✅ Wages are not combined across multiple employers, even if they participate in the same multiple-employer plan
📝 Note: This is an employer-specific rule. A person with multiple jobs could be Roth-required under one plan but not another, depending on where the W-2 wages came from.
Plans are allowed to treat any pre-tax catch-up election by a Roth-required participant as an automatic Roth catch-up instead. This gives payroll providers and recordkeepers flexibility to route contributions properly without rejecting or blocking deferrals.
Solo 401k and Small-Plan Operations
If you run your own business and sponsor a Solo 401k, you are the plan sponsor, the administrator, and the participant. That makes implementation your responsibility.
To comply with the Roth-only catch-up rule starting in 2026, Solo 401k sponsors will need to:
✅ Track prior-year W-2 wages from the business to determine if the Roth requirement applies
✅ Update plan documents or IRS model language to allow designated Roth catch-ups
✅ Reclassify any pre-tax catch-up contributions into Roth when the rule applies
✅ Maintain clear records that show how the wage test was applied and how catch-ups were handled
This rule does not apply to individuals without W-2 wages from the sponsoring employer. For sole proprietors who only earn self-employment income and file a Schedule C, the Roth-only catch-up rule generally does not apply. But S-Corp owners who pay themselves a W-2 salary may be subject to it, depending on the wage amount.
📝 Reminder: If you want to offer the higher $11,250 catch-up for ages 60 to 63 in 2025, that feature must be explicitly adopted in your Solo 401k document. Otherwise, only the standard age-50 limit applies.
Steps to Maximize 2025 Catch-Up Contributions
If you are 50 or older and managing your own retirement plan, 2025 is the time to prepare. With final IRS rules taking effect in 2026, it is important to confirm your plan limits, evaluate optional features, and ensure your Solo 401k is ready for the Roth-only transition.
Below are key steps to help you stay ahead.
Step 1 – Confirm the 2025 Contribution Limits
Start by reviewing the official IRS numbers for 2025. Using outdated limits can lead to contribution errors or missed opportunities.
- Verify the employee deferral limit, the standard age 50 catch-up, and, if applicable, the enhanced catch-up for ages 60 to 63.
- Use the IRS COLA notice and IRS Newsroom update to ensure you are working with current figures.
📝 Note: Solo 401k plans follow the same limits as traditional 401k plans.
Step 2 – Decide Whether to Enable the Age 60 to 63 Catch-Up
The enhanced catch-up is not automatic. It only applies if your plan explicitly allows it.
- Review your plan document or adoption agreement to see if this option is included
- Check with your plan provider to confirm operational support
- If not enabled, you will be limited to the standard age 50 catch-up amount
Step 3 – Prepare for Roth Catch-Up Requirements
Starting in 2026, higher earners will be required to make catch-up contributions on a Roth basis. Planning ahead can help you manage your tax position.
- Project net pay and tax impact, since Roth contributions do not lower taxable wages
- Update your payroll withholding or estimated tax payments if needed
📝 Reminder: This rule does not apply until 2026, but your 2025 income determines if you are subject to it.
Step 4 – Run the Wage Test Early
The Roth-only rule is triggered by your prior-year wages from the sponsoring employer.
- Review your 2025 W-2 wages subject to FICA
- Identify anyone who exceeds the $145,000 threshold
- Document the results and prepare to route catch-ups as Roth in 2026
Step 5 – Coordinate Across All Plans
If you contribute to more than one retirement plan, make sure you understand how the limits interact.
- Confirm your limits across all plans, including Solo 401k, workplace 401k, and 457b
- Understand that government 457b plans have unique catch-up rules that cannot be combined with each other in the same year
Step 6 – Update Plan Documents and Systems
To stay compliant, your Solo 401k must be able to handle Roth catch-ups when required. This includes both documentation and operations.
- Ensure your plan allows designated Roth catch-ups
- Program payroll or recordkeeping to apply Roth treatment when the wage test applies
- Set up procedures to reclassify any pre-tax catch-ups made in error
📝 Tip: The IRS allows plans to treat a pre-tax catch-up election as a Roth election if the participant is Roth-required and the system supports the change.
Step 7 – Keep Records for Year-End and Audit Support
Good documentation is essential if questions arise later. Save everything now to avoid confusion later.
- Retain your 2025 IRS limit checks, provider confirmations, and Solo 401k amendments
- Store screenshots of payroll settings and wage-test calculations
- Keep copies of internal worksheets and any plan-related emails
Wrapping It Up
2025 is a planning year for older entrepreneurs. Start by checking what your plan actually allows and make sure it reflects the latest contribution limits. If you are considering the age 60 to 63 enhanced catch-up, confirm that it is both adopted and supported.
For those subject to Roth-only catch-ups starting in 2026, review your payroll setup and wage records now to avoid surprises later. If you contribute to more than one plan, take a moment to confirm how each one applies the rules.
Keep your documents organized — plan amendments, provider confirmations, and payroll settings — so you can respond quickly if any issues come up. With these steps in place, your catch-up contributions for 2025 are more likely to stay on track.
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