Are Super Catch-Up Contributions Coming to Microsoft? [2025]
Starting in 2025, many employees aged 60 to 63 will be able to contribute even more to their 401(k) accounts. If Microsoft adopts these changes, it will provide workers a golden opportunity to boost their retirement savings in the final stretch of their careers.
What Are Super Catch-Up Contributions?
Super catch-up contributions are an enhanced version of the regular catch-up contributions (typically available to employees aged 50 and older). These additional contributions allow older workers aged 60 to 63 to put more into their 401(k), helping them save more aggressively as they approach retirement.
This change came about as a result of the SECURE 2.0 Act. While this act was signed into law in 2022, super catch-up contributions didn’t go into effect until January 1, 2025.
How Much Can You Contribute?
In 2025, employees aged 50 and older can invest an additional $7,500 to their 401(k)s on top of the standard $23,500 IRS limit, for a total of $31,000. For workers aged 60 to 63, the limit for catch-up contributions goes up to $11,250, for a total of $34,750
Here’s a breakdown to make it simple:
Base 401(k) contribution limit: $23,000 (subject to IRS adjustments)
Standard catch-up contribution (for employees 50+): $7,500
Super catch-up contribution (for employees 60-63): $11,250 (150% of the standard catch-up limit)
Total allowable 401(k) contribution for eligible employees (ages 60-63): $34,750
Who Qualifies for Super Catch-Up Contributions?
Not all employees can use super catch-up contributions. Here’s what you need to qualify:
You must be between 60 and 63 years old during the tax year you contribute.
You must be enrolled in a 401(k), 403(b), or 457(b) retirement plan that allows catch-up contributions
This rule applies regardless of your employer, but you should check with your plan administrator to ensure your specific 401(k) plan offers super catch-up contributions.
What Happens at Age 64?
Once you turn 64, super catch-up contributions are no longer an option. You will revert to the standard catch-up contribution limit, which is $7,500 for those aged 50 and older. This means you have a four-year window to take advantage of the higher contribution limit, making careful planning crucial.
Why This Matters for Microsoft Employees
Microsoft employees currently benefit from one of the strongest 401(k) plans, featuring a generous employer match (up to the IRS limit). If Microsoft adopts the super catch-up provision, employees nearing retirement could significantly boost their retirement savings.
Maximizing these contributions from ages 60 to 63 would be especially beneficial for high earners. Many employees at that age are at the peak of their career earnings. Contributing even more to your 401(k) would let you lower your taxable income while saving more for retirement. That’s a win-win.
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Tax Implications of Super Catch-Up Contributions
If you earn more than $145,000 annually, the SECURE 2.0 Act requires that all catch-up contributions — including super catch-up contributions — be made as Roth contributions. This means:
No upfront tax deduction: Roth contributions are made with after-tax dollars.
Tax-free growth: Once in the account, these contributions grow tax-free.
Tax-free withdrawals in retirement: As long as you follow IRS withdrawal rules, Roth funds won’t be taxed.
No RMDs: Roth 401(k)s no longer have required minimum distributions (RMDs), meaning your money can continue growing tax-free for as long as you want.
For employees earning less than $145,000, you still have the choice between pre-tax or Roth contributions. Choosing the right one depends on your expected tax situation in retirement.
Maximize Your Savings with Super Catch-Up Contributions
If Microsoft implements super catch-up contributions, here are a few strategies to help you make the most of them.
Adjust Your Payroll Contributions Early
Your 401(k) contributions come straight out of your paycheck, so it’s important to update your payroll settings ahead of time to ensure you’re maximizing your contributions. If you wait too long, you may not be able to reach the full limit before the year ends.
Instead of trying to catch up all at once, consider spreading your contributions evenly throughout the year. This way, you won’t feel as much of a strain on your take-home pay, and you’ll stay on track to hit the full amount.
Use RSU Proceeds or Bonuses to Increase Contributions
If you’re a Microsoft employee, chances are you receive RSUs that vest throughout the year, along with potential performance bonuses. These payouts can be a great way to offset the cash flow impact of increasing your 401(k) contributions.
Rather than spending your RSU proceeds or bonuses immediately, consider using them to supplement your income so you can afford to contribute more to your 401(k). This approach allows you to boost your retirement savings without significantly impacting your monthly budget.
Coordinate Contributions with Other Retirement Savings Options
While Microsoft hasn’t clarified whether they’re adopting the new super catch-up contributions rule, there are still plenty of ways to save more for retirement. If you’ve already maxed out your 401(k) investments, here are some additional ways to grow your wealth:
Mega backdoor Roth conversion: Microsoft allows employees to make after-tax 401(k) contributions beyond the standard limit, then convert those funds to a Roth IRA. This is a great way to increase tax-free retirement savings.
Health savings account (HSA): If you have an HSA-eligible health plan, contributing the maximum to your HSA provides triple tax advantages: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
Employee stock purchase plan (ESPP): The Microsoft ESPP lets employees to purchase company stock at a discount. Participating in this plan and selling shares strategically can provide additional funds for long-term savings or investment.
Deferred compensation plan (DCP): For employees at Level 67 and above, Microsoft’s DCP lets you defer a portion of your salary and bonuses, potentially reducing taxable income in high-earning years while growing investments for later withdrawal.
Restricted stock units (RSUs): Instead of immediately selling RSUs when they vest, consider a strategy for diversifying the proceeds into other tax-advantaged accounts or investments to optimize long-term growth.
Brokerage and investment accounts: If you’ve maxed out tax-advantaged accounts, investing in a taxable brokerage account provides flexibility and access to a wider range of investment options for long-term wealth accumulation.
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Supercharge Your Retirement Find with Super Catch-Up Contributions
The super catch-up contribution could help you boost your retirement savings during a key phase of your career. While it’s still unclear whether Microsoft will adopt this change, staying informed and planning ahead will ensure you’re ready to take full advantage if it becomes available.
At TrueWealth Financial Partners, we specialize in helping hardworking professionals like you navigate their 401(k) options, tax strategies, and long-term financial planning. If you’re ready to maximize your savings and ensure you’re on track for retirement, we’re here to help.
Let’s create a strategy that works for you — schedule a free consultation today.
FAQs
What are super catch-up contributions?
Super catch-up contributions are enhanced 401(k) contributions introduced by the SECURE 2.0 Act, allowing employees aged 60 to 63 to contribute more than the standard limit. Starting in 2025, eligible participants can make additional contributions of up to $11,250, increasing their total annual 401(k) contribution limit to $34,750.
Are super catch-up contributions mandatory for employers to offer?
No, the SECURE 2.0 Act does not mandate employers to offer super catch-up contributions. It is optional for plan sponsors to include this feature in their retirement plans.
Is Microsoft going to adopt super catch-up contributions?
As of now, Microsoft has not announced whether it will implement the super catch-up contributions provision set to take effect in 2025 under the SECURE 2.0 Act. Employees should keep an eye on official company communications for updates.
Does Microsoft match catch-up contributions?
Microsoft matches 50% of employee 401(k) contributions up to the IRS annual limit. However, this match does not extend to catch-up contributions for employees aged 50 and older.
If Microsoft adopts super catch-up contributions, will they be matched?
Given that current catch-up contributions are not matched by Microsoft, it is unlikely that super catch-up contributions would be eligible for matching if adopted. However, nothing can be said with certainty for now.
What are the tax implications of super catch-up contributions?
For employees earning more than $145,000 annually, all catch-up contributions, including super catch-up contributions, must be made as Roth (after-tax) contributions starting in 2026. This means contributions would be made with after-tax dollars, but qualified withdrawals in retirement are tax-free.
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