Big Change Coming for 50+ Savers: New SECURE Act 2.0 Catch-Up Contribution Rules for Workplace Retirement Plans

If you are age 50 or older—or getting close—and you’re earning a higher income while saving for retirement, there’s an important update you should know about.

The IRS has finalized new regulations tied to the SECURE Act 2.0, originally passed in 2022. These rules will significantly affect how certain savers make their catch-up contributions to workplace retirement plans like 401(k)s and 403(b)s.

What’s Changing

Beginning January 1, 2026, if you’re 50 or older and your prior-year FICA wages from your employer exceed $145,000, you’ll be required to make any catch-up contributions as Roth contributions—meaning your contributions must be made with after-tax dollars.

A few key points:

  • The $145,000 income threshold is indexed for inflation, so it will likely increase each year after 2026.
  • Many people make catch-up contributions on a pre-tax basis to lower their taxable income so this change could impact their taxes owed.
  • Under the new rule, higher-earning savers won’t be able to make those catch-ups pre-tax; instead, they’ll be routed to the Roth side of the workplace retirement plan.

Why It Matters

This change can have a meaningful impact on your tax strategy and cash-flow planning. If you’ve relied on pre-tax catch-up contributions to reduce your taxable income each year, that option will soon disappear if your income is above the $145,000 threshold.

On the flip side, Roth contributions grow tax-free and qualified withdrawals in retirement aren’t taxed—so while you lose an immediate deduction, this shift could create long-term benefits if you plan ahead. Between now and the end of 2025, there’s still an opportunity to maximize pre-tax catch-ups before the new rules take effect.

Planning Ahead

Start by reviewing your income. If you expect to be above the threshold, it’s important to recognize that your future catch-ups to your workplace retirement plan will be Roth-only. From there, consider adjusting your strategy now—some savers may want to maximize pre-tax catch-ups for the rest of 2025 or revisit their withholding to better manage cash flow.

It’s also worth evaluating the benefits of Roth growth. For many, the transition to Roth catch-ups will enhance tax diversification in retirement and potentially create a more balanced long-term savings strategy.

We’re Here to Help

Rules like these can be tricky, especially when they intersect with your overall retirement income and tax strategy. If you’d like to talk through how this change affects you, or explore ways to make the most of the transition, reach out to our team. We’re happy to walk you through your options and tailor a plan for your specific situation.