I f you began contributing to a 401(k) as soon as you started working, you may have accumulated a tidy nest egg for retirement. But not everyone had that luxury.

Strategy: Make up lost ground. The tax law allows you to add extra “catch-up contributions” late in your career to beef up your retirement savings. What’s more, a new tax law provision taking effect in 2025 enables certain older plan participants to salt away even more in their accounts.

Here’s the whole story: With a traditional 401(k) plan, a participating employee can elect to contribute a portion of their salary to their personal account on a pre-tax basis. These annual contributions are subject to inflation-adjusted limits. For 2025, the basic limit is $23,500 (up from $23,000 in 2024). In addition, an employer can choose to provide matching contributions up to a stated percentage of salary. All of the funds—including employee contributions and matching employer contributions and investment earnings—compound over time without any current tax erosion. When withdrawals are made, the distributions are taxed at ordinary income rates. Participants generally must begin taking required minimum distributions (RMDs) after reaching age 73. Your employer may also offer the option of a Roth 401(k) account.

Employee contributions directed into a Roth 401(k) are currently taxable, but future distributions may be completely exempt from federal income tax. As you might imagine, it’s relatively easy to build your savings into six or seven figures if you consistently allocate a good chunk of your salary to your 401(k) account during your working years. But you may not be able to contribute so much if buying a home and saving for college take priority. So, you may not have enough to comfortably retire when you want to. Ace in the hole: Once you reach your 50s, when you could have more disposable income to work with, you can kick in extra amounts each year through so-called catch-up contributions. For 2025, the basic catch-up contribution limit for an employee age 50 or older is $7,500 (the same as 2024). In other words, you can potentially set aside as much as $31,000 in your 401(k) in 2025 ($23,500 + $7,500). Even better: The SECURE 2.0 Act boosts the catch-up contribution limit for 401(k) participants who are age 60 through 63. If you’re in this age group, the catch-up contribution maximum for 2025 is increased to $11,250. This “super-catch-up contribution” limit will be adjusted for inflation in 2026 and beyond. But there is one catch. Starting next year, catch-up contributions for an employee who earned $145,000 or more in the previous year must be made to a Roth 401(k) account. This new requirement was initially scheduled to take effect in 2024, but the IRS postponed it to 2026 (see box). In any event, the SECURE 2.0 “super-catchup contribution” deal provides greater opportunities for eligible older employees to save for retirement. Tip: Smaller catch-up contributions are also available with SIMPLE-IRA plans and traditional and Roth IRAs.