Starting in 2026, a new rule will change how workers over 50 save for retirement. This comes from the SECURE 2.0 Act, a law designed to help Americans save more for the future.
If you are 50 or older and earn a high income, this rule could affect you.
What’s Changing?
Employees age 50 and older can normally make extra “catch-up” contributions to workplace retirement plans, like a 401(k), 403(b), or SIMPLE Plans.
Age | Regular Limit | Catch-Up Limit | Total Possible Contribution | Notes |
Under 50 | $24,500 | N/A | $24,500 | Regular limit can be either pre-tax or Roth |
50–59 | $24,500 | $8,000 | $32,500 | Catch-up must be Roth if prior-year wages > $150,000 |
60–63 | $24,500 | $11,250 (“super catch-up”) | $35,750 | Catch-up must be Roth if prior-year wages > $150,000, plan must allow |
64+ | $24,500 | $8,000 | $32,500 | Catch-up must be Roth if prior-year wages > $150,000 |
Source: IRS
Under the new rule:
- If you are older than 50 and earned more than $150,000 in FICA wages last year, your catch-up contribution must go into a Roth account (after-tax).
- Your regular contributions can still be pre-tax or Roth. Only the catch-up portion is affected.
- The $150,000 income threshold limit will increase over time with inflation.
Why This Matters
- Pay taxes now, not later: Roth contributions are made with after-tax dollars. You pay taxes now, but future withdrawals are usually tax-free.
- Regular contributions are unchanged: You can still reduce your taxable income today with pre-tax contributions.
- Planning advantages: Paying taxes on catch-up contributions now can help you avoid higher taxes in retirement.
FAQ’s
- Does the new rule affect catch-up contributions to IRAs?
- IRAs are not affected. The regular contribution limit in 2026 is $7,500, with an additional catch-up limit of $1,100.
- What happens if my plan doesn’t offer Roth contributions, and I'm required to make catch-up contributions as Roth?
- If your retirement plan doesn’t offer Roth contributions, you won’t be able to make catch-up contributions to the plan. You may be able to save more for retirement by contributing to an IRA, if you’d like.
More information and FAQ’s can be found on this article: Catch-up rules will change for high-income earners | Vanguard