As we move toward 2025, several updates to 401(k) and other retirement savings plans will take effect due to provisions in the SECURE 2.0 Act and IRS adjustments. 

1. Increased Contribution Limits 
Starting in 2025, the annual 401(k) contribution limit will rise to $23,500 , up from $23,000 in 2024. Additionally, individuals aged 60–63 can make special catch-up contributions of up to $11,250, significantly higher than the $7,500 allowed for those aged 50 and older. 

2. Mandatory Automatic Enrollment 
Plans established after December 29, 2022 must include automatic enrollment as part of the plan. Employers offering new 401(k) or 403(b) plans must automatically enroll eligible employees at a contribution rate of at least 3%. This provision, effective in 2025, is designed to ensure broader participation in retirement savings. 

3. Emergency Savings Features 
Employers can integrate emergency savings accounts into retirement plans, allowing employees to contribute on a Roth basis up to $2,500. These funds can be accessed without penalties, offering financial flexibility for unforeseen expenses. 

4. Expanded Eligibility for Part-Time Employees 
Beginning in 2025, part-time employees who work at least 500 hours annually for two consecutive years must be allowed to participate in their employer’s 401(k) plan. This change is aimed at improving access to retirement benefits for more workers. 

5. Student Loan Payment Matching 
Employers can now match employee student loan payments with equivalent contributions to their retirement plans. This innovative approach helps employees build retirement savings while paying off education debt. 

6. Tax and Withdrawal Adjustments 
- Required Minimum Distributions (RMDs): Roth accounts in workplace plans will no longer require RMDs starting in 2024. This rule simplifies tax planning for retirees. 
- Emergency Withdrawals: A new provision allows penalty-free withdrawals of up to $1,000 for emergencies, with the option to repay within three years.

These updates reflect the government’s commitment to fostering retirement security. Whether you’re just starting to save or nearing retirement, these changes can impact your strategy. Stay informed, and consult your financial advisor to make the most of these new provisions.

The Ultimate Guide to Making the Most of Your 401(k) in 2025

If you're looking to build a secure financial future, understanding and maximizing your 401(k) plan is a critical step. Here’s everything you need to know about making the most of your 401(k) in 2025, including key strategies to boost your savings and common mistakes to avoid.

1. Start Contributing Early – and Maximize Contributions

The earlier you start contributing to your 401(k), the more time your money has to grow. Thanks to the power of compound interest, small contributions made early in your career can grow substantially by the time you retire. For 2024, the IRS increased the contribution limit for 401(k) plans to $23,000, with an additional $7,500 catch-up contribution for those aged 50 and older. Consider increasing your contributions incrementally if you can’t max out right away, aiming to take advantage of any available employer match.

2. Take Advantage of Employer Matching

Employer matching is one of the biggest perks of a 401(k) plan. Many companies match a percentage of your contributions up to a certain limit. If you’re not contributing enough to get the full match, you’re leaving free money on the table. Be sure to understand your employer’s matching policy, as some may have vesting schedules or specific contribution formulas.

3. Review and Adjust Your Asset Allocation

Life changes, and so should your investment strategy. Review your 401(k) portfolio annually to make sure your asset allocation aligns with your financial goals and risk tolerance. As you get closer to retirement, you may want to shift more of your investments from high-risk, high-reward options (like stocks) to safer, income-generating options (like bonds). Regularly adjusting your asset mix can help keep your retirement strategy on track.

4. Stay Informed About Fees

401(k) fees can erode your investment returns over time. These fees often cover administrative costs, record-keeping, and fund management. Take the time to review your plan’s fee structure and assess whether any high-fee funds are necessary or if lower-fee options are available. Some funds come with high expense ratios, which can add up over the years, so opting for low-cost index funds can often provide substantial savings over time.

5. Seek Professional Guidance

Managing a 401(k) effectively can be challenging, especially if you're unsure about investing. Consulting with a professional 401(k) advisor can help you navigate complex choices, ensure your portfolio is well-balanced, and provide peace of mind about your retirement strategy. At Top401kAdvisors.com, we connect you with experienced advisors who can guide you through the intricacies of 401(k) management.

Final Thoughts

Your 401(k) is a powerful tool for securing your financial future, but maximizing its potential requires informed decisions and consistent contributions. By taking advantage of employer matching, diversifying your investments, and seeking guidance when needed, you can set yourself up for a comfortable retirement. Start today by reviewing your current plan, setting realistic goals, and connecting with a trusted 401(k) advisor who can help you make the most of your retirement savings.

In today's rapidly changing financial landscape, ensuring the health and effectiveness of your company's 401k plan is more critical than ever. For businesses in the Lehigh Valley region, including Allentown, Bethlehem, Easton, and surrounding areas, understanding the importance of a 401k tune-up and fulfilling fiduciary responsibilities is paramount. That's where working with Top 401k Advisors an affiliate of Cornerstone Portfolios can make all the difference.

Why a 401k Tune-Up Matters:

• Maximizing Employee Benefits: A well-tailored 401k plan not only attracts top talent but also helps retain valuable employees by offering competitive retirement benefits.

• Legal Compliance: Regularly reviewing and updating your 401k plan ensures compliance with changing regulations and protects your business from potential legal risks.

• Investment Performance: A thorough tune-up evaluates investment options, fees, and performance to ensure that participants' retirement savings are optimized for growth.

• Employee Education: Revisiting your 401k plan provides an opportunity to educate employees about retirement planning, investment strategies, and the importance of saving for the future.

Fulfilling Fiduciary Responsibilities:

• Acting in Participants' Best Interests: As a plan sponsor, you have a fiduciary duty to act solely in the best interests of plan participants and beneficiaries.

• Prudent Investment Selection: Fiduciaries must prudently select and monitor plan investments, ensuring they are diversified and aligned with participants' goals.

• Fee Transparency: Disclosing all plan fees and expenses is essential to fulfilling fiduciary responsibilities and ensuring participants' retirement savings are not eroded by excessive costs.

• Ongoing Plan Evaluation: Regularly assessing the plan's performance, fees, and service providers demonstrates a commitment to fulfilling fiduciary duties and promoting participants' financial well-being.

Why Choose Top 401k Advisors an affiliate of Cornerstone Portfolios:

• Expertise and Experience: With years of experience in retirement planning and investment management, Cornerstone Portfolios' team of advisors understands the unique needs and challenges facing Lehigh Valley businesses.

• Personalized Solutions: We work closely with each client to tailor 401k plans that align with their business objectives and provide meaningful benefits to employees.

• Fiduciary Support: As fiduciary advisors, we uphold the highest standards of transparency, objectivity, and integrity, ensuring that our recommendations always prioritize our clients' best interests.

• Ongoing Support: From plan design and implementation to ongoing monitoring and participant education, Cornerstone Portfolios provides comprehensive support at every stage of the retirement planning process.

A 401k tune-up is not only a prudent business decision but also a fiduciary responsibility for Lehigh Valley companies. By partnering with Top 401k Advisor, an affiliate of Cornerstone Portfolios, businesses can ensure their retirement plans are optimized for success, while fulfilling their obligations to employees and participants. Contact Top 401k Advisors, Lehigh Valley’s Top Choice today to learn more about how we can help you achieve your retirement plan goals.