What’s Changing for Retirement Plans in 2025? - 1st Source

There’s been a steady drumbeat of changes to retirement plans over the past few years, and 2025 is shaping up to be another big moment—thanks to the SECURE 2.0 Act. While some provisions have already rolled out, a new batch went live on January 1, 2025. And whether you’re managing a plan or participating in one, it’s worth knowing what’s being affected.

These aren’t small or irrelevant changes. They’ll affect how people enroll, who qualifies, and how much they can sock away for retirement—especially for part-time workers and those nearing retirement age. Let’s take a closer look at what’s changing, who it impacts, and what you should start thinking about.

Automatic Enrollment: A Push in the Right Direction

If you’ve opened a new 401(k) or 403(b) plan since late 2022—or if you’ve made major changes to an existing one—you may be required to adopt automatic enrollment starting in 2025.

Here’s how it works: Employees are automatically enrolled into the plan unless they actively choose to opt out. Employers must also set a default contribution rate, often around 3% of pay, with annual increases built in (typically up to 10% or more). The idea is simple but powerful—make saving the default behavior.

Why does this matter? Because automatic enrollment significantly boosts participation rates. Studies have shown that people are much more likely to save for retirement when they don’t have to take the first step themselves. And while employers might worry about added complexity, many plan providers offer tools to manage enrollment, communications, and compliance.

Now, not every plan falls under this requirement. Plans created before December 29, 2022, are generally exempt—unless they added a 401(k) feature after that date. So if you’re not sure whether your plan qualifies, it’s a good idea to confirm with your retirement plan consultant.

A Win for Part-Time Workers

Historically, part-time employees have often been left out of retirement plans—even when they’ve been with the same company for years. That’s changing in 2025.

Under SECURE 2.0, long-term part-time (LTPT) employees will be eligible to participate in 401(k) or ERISA 403(b) plans once they’ve:

  • Reached age 21, and
  • Completed 500 hours of service in two consecutive 12-month periods

This is a big shift from previous rules, which required three years of service. So, someone who works just under 10 hours per week could now qualify sooner—opening the door to benefits they were previously excluded from.

Employers will need to track hours carefully and communicate clearly with eligible part-timers. But from a broader perspective, this change reflects a growing recognition of how modern workers’ schedules look—more flexible, less traditional, and often part-time by choice.

For employees, it means access to tax-advantaged savings, employer matches, and a stronger foundation for long-term financial security.

Contribution Limits: Room to Save More

If you’re trying to max out your retirement savings in 2025, there’s some good news. The IRS recently announced new contribution limits, and several of them represent meaningful increases.

Let’s break them down:

  • Standard employee contribution limit (pre-tax + Roth): $23,500
  • Catch-up contribution (for individuals 50 and older): $7,500
  • Total contribution limit (employee + employer): $70,000
    • Note: This doesn’t include catch-up contributions

But one of the more interesting updates applies to a specific age group. Thanks to SECURE 2.0, individuals who are 60, 61, 62, or 63 at any point in 2025 can make a larger catch-up contribution—up to $11,250.

That’s a nice boost during what’s often called the “retirement red zone”—the critical years just before leaving the workforce. It gives people in their early 60s a chance to close the gap if they’re behind on savings or want to build a bigger cushion.

However, it’s worth noting that high earners may soon be required to make catch-up contributions on a Roth basis—meaning with after-tax dollars. That provision hasn’t taken full effect yet, but it’s another change to watch if you’re planning ahead.

What Should You Do Now?

If you’re an employer or plan sponsor, this is a great time to review your plan’s setup:

  • Does your plan fall under the new auto-enrollment requirements?
  • Do you have part-time employees who might become eligible next year?
  • Are your systems ready to track service hours accurately?
  • Have you communicated upcoming changes to your participants?

If you’re a participant, take a look at your contribution rate, especially if you’re in your 50s or 60s. You may be eligible to contribute more than you think—and taking advantage of that extra space can make a real difference later.

And if any of this feels overwhelming? Don’t go it alone. A quick conversation with your retirement plan consultant can go a long way toward making sure you’re on track and in compliance.

The Bottom Line

Retirement planning is never static. The rules evolve, the strategies shift, and the best decisions change depending on where you are in life. The SECURE 2.0 updates for 2025 are all about expanding access, encouraging savings, and giving people—especially those often left out—a better shot at a financially secure retirement.

So whether you’re a full-time employee nearing retirement, a part-timer building your savings, or an employer trying to stay compliant, these changes are worth understanding. Because at the end of the day, your future really is your business.