A Treasure Hunt for Retirement Savings & Other 2025 Changes
Who doesn't love a good treasure hunt? Or maybe even better, isn't it fun when you stick your hand in an old coat pocket and find some greenbacks you forgot you put there?
Well now there is a way to "treasure hunt" for retirement funds that you may have forgotten you had or of which you have lost track!
Part of the Secure 2.0 Act was the creation of a searchable database to help you locate any such forgotten retirement funds. With American workers averaging over 12 jobs during their lifetimes (according to the Bureau of Labove Statistics), it's no surprise that there is almost a trillion dollars of unclaimed pension and other retirement funds out there. So, the need for this database being put together by the government is well past due.
To access this database, you will need a "Login.gov" secure account available at https://login.gov. That may sound like a hassle, but really you should be getting one of these anyway, as they will be needed in the near future for most dealings with the US government, including the IRS and the Social Security Administration.
Frankly, these accounts make online transactions with the Feds much more secure and resistant to identity theft, which is rampant.
I've had a Login.gov account for some time now, and honestly, they aren't that hard to set up. Generally, you will need to provide the usual information such as your full legal name, social security number, and date of birth. Also, you will need a mobile device of some kind, and some form of U.S. based state-issued identification, such as a front and back photo of a driver's license.
By the way, the database is still new and being added to all the time, so check it now but also keep checking it periodically to see if anything new has been added related to you.
Another 2025 change affecting Americans closing in on retirement age are new enhanced catch-up contributions that can be made to 401(k) and SIMPLE IRA plans. You may be familiar with the fact that persons aged 50 or older were already allowed to make additional "catch-up" contributions to their plans over and above the normal contribution limits. In 2025, for 401(k) plans, this catch-up contribution is $7,500, for a total limit of $31,000, and for SIMPLE IRAs, the catch-up is $3,500 for a total limit of $19,500.
Beginning this year, however, if you are age 60 through 63, you can contribute even more. For a 401(k) plan, this souped-up catch-up contribution is $11,250, for a total limit of $34,750, and for SIMPLE IRAs, it is $5,250 for a maximum total of $21,250. Again, these higher limits can only be used if you are 60, 61, 62 or 63 at the end of the calendar year.
One final change for 2025 you need to know about if you have inherited an IRA from someone who passed after 2019 and who was not your spouse. You may have heard that in this situation, with just a few limited exceptions, you have to withdraw the inherited funds and pay tax on them no later than December 31 of the 10th full calendar year following the death of the deceased IRA owner. Further, in many cases, non-spouse beneficiaries have to withdraw required minimum distributions (RMDs) at least annually, with the account being fully withdrawn by the end of the 10-year period. That isn't really new, although for a time there was confusion about whether the annual RMD was really required. The IRS in final rules has unequivocally stated that the annual RMDs are required.
What is new is that the IRS will begin assessing the 25% penalty for failure to take RMDs in 2025. Due to the aforementioned confusion about the annual requirement, the IRS had provided relief from the penalty for a few years, but that relief has now expired. If you find yourself with an inherited IRA, your financial advisor or tax professional can help you determine your RMD requirements and help you meet this 10-year rule.
