Changes are coming for 401(k)s and IRAs in 2025. Here's what to know.

Changes to the rules of retirement plans are worth keeping track of, as it can help you to ramp up your savings, enjoy additional benefits and, in some cases, avoid unwanted penalties. Each fall, the Internal Revenue Service (IRS) announces cost-of-living adjustments for retirement plans, generally slightly increasing the maximum contribution limits for different plan types to account for inflation. But this year, a number of other shifts are happening as well.

If you are saving for your golden years in a 401(k) plan or individual retirement account (IRA), here is what to know about what's coming in 2025.

Those aged 60 to 63 can make 'super-sized' catch-up contributions

One notable change coming to workplace retirement plans in 2025 applies to those who are ages 60 to 63. "Starting in 2025, if you're 60 to 63, you will get a higher contribution limit than people in their 50s," said GoBankingRates.

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Regular catch-up contributions already allow employees age 50 and older to "make additional deposits into their tax-advantaged retirement savings accounts," more than the standard contribution limits allow, said Kiplinger.

But coming up, "people in their early 60s" now have the option to "contribute up to $11,250 next year — an additional $3,750 in catch-up contributions — beyond the general 2025 deferral limit of $23,500," said The New York Times. Effectively, this "means they can potentially contribute up to $34,750 in total to a workplace retirement account."

You are eligible to make this additional catch-up contribution if you "are between 60 and 63 by the end of the calendar year," said Kiplinger. Your upper limit will be "the greater of $10,000 or 150% of the 2024 catch-up contribution limit that is indexed for inflation."

Part-time workers will be able to access a 401(k) plan more quickly

Starting in 2025, "more part-time workers will be able to join their company's retirement plans, like 401(k)s and 403(b)s," which effectively opens up retirement savings options for "people who might have been left out before," said Kiplinger.

As it now stands, "you must work 1,000 hours in a year or 500 hours over three consecutive years" to qualify for an employer's 401(k) plan, said GoBankingRates. But starting in 2025, "the three years will be reduced to two, making it quicker for part-time workers to become eligible."

401(k) enrollment will become automatic

Another change coming is that starting in 2025, "all new 401(k) plans — those established after Dec. 29, 2022 — must automatically enroll eligible employees unless they opt out," said GoBankingRates. This is in contrast to current guidelines, where "you probably had to contact the human resources office or go onto your company’s website to enroll once you became eligible."

When you are initially enrolled automatically, your contribution amount "must be at least 3% but not more than 10%," and "each year thereafter, that amount is increased by 1% until it reaches at least 10%, but not more than 15%," said Kiplinger. Rest assured, you still have the choice to opt out if you prefer: "employees can change the rate or can opt out by electing a zero percent (0%) contribution rate."

Inherited IRA penalties will take effect for required withdrawals not taken

Those who have inherited an IRA should take note of their required minimum distributions (RMDs) in 2025, or else they may face a consequence.

Previously, "heirs could 'stretch' inherited IRA withdrawals over their lifetime, which helped reduce yearly taxes," said CNBC. But now, "certain accounts inherited since 2020 are subject to the '10-year rule,' meaning IRAs must be empty by the 10th year following the original account owner's death." (Note that there are still some who are exempted from this rule.)

For years, "the IRS has provided transitional relief for beneficiaries who did not take RMDs from their inherited IRAs in 2021 through 2024," said Kiplinger. But as of 2025, a "25% penalty will be assessed for those who do not take their RMD." This penalty can also apply if you "don't take enough," said CNBC, though "it's possible to reduce the penalty to 10% if the RMD is 'timely corrected' within two years," according to the IRS.