If you’re over age 50, you probably know about catch-up contributions. These are extra dollars you can put into your 401(k) or 403(b) to boost your retirement savings as you get closer to retirement. For 2025, the regular 401(k) limit is expected to be around $23,000—and the catch-up lets you add another $7,500 on top of that.
But starting in 2026, a new rule will change how those catch-up contributions work—especially if you’re a high earner.
Let’s break down what’s changing, who it affects, and what you should do to stay ahead of the curve.
What’s Changing?
Under the SECURE Act 2.0, Congress added a rule that targets people aged 50 and over who make more than $145,000 per year (adjusted for inflation). Starting in 2026:
If you earned more than $145,000 in the prior year, your catch-up contributions must go into a Roth account—not a traditional pre-tax account.
This means those extra contributions will be made with after-tax dollars, and you won’t get a tax break for them now. The good news is they’ll grow tax-free, and you won’t pay taxes when you take them out later in retirement.
Who Is Affected?
This rule applies to you if:
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You are 50 or older (or will be turning 50 during the calendar year).
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You earn more than $145,000 in W-2 wages from your employer (not self-employment income).
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You make catch-up contributions to a 401(k), 403(b), or 457(b) plan.
If you earn less than $145,000 in the prior year, you can still choose whether your catch-up contributions go into a Roth or traditional account (if both are available in your plan).
Why Is This Happening?
Congress wants to raise tax revenue now. Traditional 401(k) contributions reduce your taxable income today, while Roth contributions don’t. By requiring higher earners to use Roth accounts, the government collects more tax money now rather than later.
Lawmakers also argue this change encourages tax diversification. That means having a mix of taxable, tax-deferred, and tax-free money in retirement.
A Quick Example
Let’s say you’re 52 years old, and in 2025 you earn $160,000 at your job. In 2026, you plan to max out your 401(k), including a $7,500 catch-up contribution.
Before the rule change, you could have put the full $30,500 into your traditional 401(k), reducing your taxable income by that much.
Now, with the new rule, your first $23,000 (regular limit) can still go into traditional or Roth. But your $7,500 catch-up must go into the Roth side of the plan. You’ll pay taxes on that money now—but it will grow tax-free from here on out.
What If My Plan Doesn’t Offer Roth?
This is a big problem: some employers still don’t offer a Roth 401(k) option. In that case, you wouldn’t be able to make catch-up contributions at all—unless your employer updates the plan.
Because of this issue, the IRS delayed the rule until 2026, giving plan sponsors more time to catch up (no pun intended).
How This Affects Your Tax Planning
For high earners, this rule means:
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Higher taxable income in the short term – You’ll lose some of the tax deduction you might be used to getting from catch-up contributions.
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More Roth money in retirement – This isn’t necessarily bad. Roth accounts grow tax-free and don’t have required minimum distributions (RMDs).
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Potential changes to your paycheck – You may want to adjust your tax withholdings or review your total savings plan to keep things balanced.
What Should You Do Now?
Here are some action steps you can take to get ready:
1. Check if your employer offers a Roth 401(k)
Ask HR or your plan administrator. If they don’t offer a Roth option, find out if they plan to add one before 2026.
2. Estimate your taxable income
If you’re close to the $145,000 limit, it may be worth adjusting income or deferrals in certain years if you want to avoid the Roth rule.
3. Re-evaluate your retirement tax strategy
Do you want more tax-free income in retirement? This rule may help you build that, even if it means paying a little more in taxes now.
4. Work with a financial advisor (that’s us!)
We can help you decide how much to save, where to put it, and whether Roth contributions make sense for your overall goals.
The Bottom Line
For high earners over 50, catch-up contributions have always been a helpful way to supercharge retirement savings and reduce taxes. But starting in 2026, the rules are changing—at least for the catch-up portion.
The good news? You still get to save more for retirement. And if used wisely, Roth accounts can be a powerful tool for building tax-free wealth.
But the new rules do add some complexity, especially if your employer’s plan isn’t ready.
Now’s the time to review your plan options, talk to HR, and update your retirement strategy. A little planning today can go a long way toward keeping your savings on track—without surprises later.
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