If you’re among the roughly 70% of workers in the United States who contribute to a 401(k) or similar workplace retirement plan, some important upcoming changes could affect how you make extra retirement contributions known as “catch-ups.”
These catch-up contributions let workers age 50 and older save beyond regular annual limits, helping boost retirement savings as they near retirement age.
New IRS rules tied to the SECURE 2.0 Act, passed a few years ago, now require certain higher earners to make those catch-up contributions exclusively on a Roth basis. That means contributions are made with after-tax dollars instead of pre-tax, but with tax-free withdrawals in retirement.
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Initially, that change was slated to start with contributions made in 2024. But the IRS has finalized regulations giving employers and taxpayers some flexibility to adjust. Here’s more of what you need to know.
Roth catch-up contributions SECURE 2.0
Under SECURE 2.0, if you're at least age 50 and earned $145,000 or more in the previous year, you can make catch-up contributions to your employer-sponsored 401(k) account.
- But there’s a new catch. You'll eventually have to make those extra contributions on a Roth basis, using after-tax money.
- You wouldn’t be able to get tax deductions on those catch-up contributions as you would with typical 401(k) contributions.
- But you could withdraw the money tax-free when you retire.
Note: The SECURE 2.0 Roth catch-up contribution rule won’t apply to taxpayers making $144,999 or less in a tax year.
For example, using the 2025 contribution limits as a reference (2026 limits aren’t yet available), you can contribute up to $23,000 to your 401(k), plus an additional $7,500 catch-up contribution if you're 50 or older, totaling $30,500.
- Under the new rule, the $23,000 regular contributions would still be made pre-tax, but the $7,500 catch-up amount must be made in a Roth account.
- You would pay taxes upfront on the catch-up amount, but withdrawals of that money in retirement would be tax-free.
*This is a simplified example, and the $23,000 and $7,500 figures are 2025 limits used for that purpose. Those amounts might increase for 2026 due to inflation adjustments.
The final regulations state that full applicability of the Roth catch-up rule will generally take effect for most plans beginning after December 31, 2026. (Certain governmental plans and plans maintained under a collective bargaining agreement might get more time to adjust.)
However, some might note that the catch-up rule technically applies as of January 1, 2026. But the 2027 date essentially gives employers and plans a grace period (of sorts) as they work in good faith to ensure their plans fully comply with the new rules.
Per an IRS release: "The final regulations also permit plans to implement the Roth catch-up requirement for taxable years beginning before 2027 using a reasonable, good faith interpretation of statutory provisions."
More clarification on Roth catch-up contributions
The IRS final rules also clarify other questions, like how employers determine if an employee’s income exceeds the $145,000 threshold.
- Employers that are part of a controlled or affiliated service group can combine wages from related companies to make this calculation, which helps avoid confusion for workers with multiple related employers.
- Additionally, if a catch-up contribution is mistakenly made as a pre-tax contribution instead of a Roth, the final rules explain that plans have until the end of the following plan year to correct it.
The IRS notes that the grace period is designed to reduce administrative burdens and give participants and employers more time to correct errors.
As Kiplinger had reported, more than 200 entities, made up of Fortune 500 companies, firms and public employers, including the American Retirement Association, Chipotle Mexican Grill, Fidelity Investments, Charles Schwab, Microsoft Corporation and Delta Airlines, had initially asked Congress (PDF) for a two-year delay to the Roth catch-up rule.
What the IRS final catch-up regulations mean for you
If you’re an employee age 50 and older, you can continue making catch-up contributions to your retirement accounts for now. However, once the rules are fully implemented (or sooner in some cases), high earners will need to make Roth-only catch-up contributions.
In addition, the IRS confirmed the “super catch-up” provision under the SECURE 2.0 Act, effective beginning with the current 2025 tax year.
As Kiplinger has reported, workers ages 60 to 63 can contribute significantly more above the standard catch-up limits — up to $11,250 in 2025.
For more information, see: New SECURE 2.0 Super 401(k) Contribution Catch-Ups.
As always, consult a tax or financial professional to determine how these and other tax changes might impact your retirement savings strategy.
Note: This article has been updated to clarify the nature of the 2027 date for full applicability of the final regulations.
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