Prepare for Upcoming Changes to Retirement Plans for 2025
Each new year brings opportunities for change to many parts of life—especially when it comes to your financial future—and 2025 is no exception.
In this coming year, several new rules and updates in federal law will bring significant changes to 401(k)s, individual retirement accounts (IRAs), and other retirement plans.
In this blog post, we’ll give an overview of the changes coming to retirement plans governed by ERISA in 2025 and what you need to know to prepare your savings.
Key Updates in 2025
The federal government adjusts the rules surrounding retirement plans every year. However, 2025 will see some important additional updates, largely thanks to the SECURE 2.0 Act, a federal law aimed at helping more people save for retirement. Although Congress passed this law in 2022, some parts are only now taking effect.
Higher Contribution and Catch-Up Limits
Individuals can contribute more of their income to retirement plans in the new year. In 2025, the annual contribution limit will rise to $23,500 for those enrolled in a 401(k), 403(b), 457 government plan, or Thrift Savings Plan. This is an increase from 2024’s $23,000 limit.
Employees over 50 enrolled in these plans can also contribute $7,500 in “catch-up” contributions. However, if you’re between 60-63, your catch-up contribution limit goes up to $11,250.
If you have an IRA, the standard contribution limit remains at $7,000 in 2025, with a catch-up contribution of $1,000 for individuals aged 50 and older.
Automatic Enrollment for New 401(k) Plans
Beginning in 2025, many new 401(k) plans will require automatic enrollment. Employees will be automatically enrolled at a contribution rate of at least 3%, with annual increases of 1% until reaching at least 10%.
This rule applies to most new plans. However, some startups and small businesses with fewer than 10 employees may be exempt.
Faster Eligibility for Part-Time Employees
Part-time employees will face a shorter service requirement to qualify for retirement benefits. They will now be eligible to participate in 401(k) plans after working only 2 consecutive years of at least 500 hours for their employer.
Tighter Rules for Inherited IRAs
If you inherit an IRA from someone who died on or after January 1, 2020, you must withdraw all funds within 10 years of their passing. Individuals under the stated exceptions to this “10-year rule” must meet the required minimum distributions (RMD) or face costly penalties.
Expanded Income Ranges for Saver’s Credit
The Saver’s Credit, which provides a tax benefit for low- and moderate-income workers who contribute to retirement plans, is becoming more accessible in 2025.
For married couples filing jointly, the limit increases to $79,000, up from $76,500. Heads of household can qualify with incomes up to $59,250, while single filers qualify up to $39,500.
What This Means for ERISA and Your Rights
The Employee Retirement Income Security Act (ERISA) is the federal law that ensures employer-sponsored retirement plans are managed in participants’ best interests. Employers and plan administrators must act honestly and responsibly to safeguard employees’ future benefits.
This includes prudent asset management, disclosure of essential plan information, and avoiding conflicts of interest.
ERISA in 2025 will ensure employers and plan administrators comply with all these newly adopted changes. If your plan administrators fail to meet these standards, you may be able to take legal action to protect your benefits.
Trusted Advocates for Your Future
Navigating yearly changes to your retirement plan can be confusing and overwhelming. However, you don’t have to face them alone.
The Peace Law Firm has spent nearly two decades helping South Carolina residents understand and exercise their rights under ERISA. Unlike firms representing employers or insurers, we focus exclusively on representing real people.
If you’re concerned about your rights or an employer’s irresponsible plan management, we are here to help. Contact our office to schedule a free, no-obligation consultation and take the first step toward protecting your future.
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