If you are over 50, you may already be using catch-up contributions to put extra money into your retirement accounts each year. These additional contributions can make a big difference in helping you reach your retirement goals.
Recent law changes, however, are bringing new rules for how catch-up contributions work. Here’s what you need to know. (IRS.gov)
What Are Catch-Up Contributions?
Catch-up contributions are extra amounts that workers age 50 or older can add to their retirement plans , such as a 401(k), 403(b), or 457(b), once they reach the standard contribution limit.
For example, in 2025 the general limit for employee contributions to a 401(k) is $23,000, and those 50 and older can contribute an additional $7,500 as a catch-up. These contributions allow you to save more as you get closer to retirement.
What’s Changing?
Two key updates are coming because of the SECURE 2.0 Act, a law designed to help people save more for retirement.
1. Bigger Catch-Up Contributions for Ages 60–63
Beginning in 2025, workers who are 60, 61, 62, or 63 can contribute even more.This new “super catch-up” amount will be 150% of the regular catch-up limit. That means if the standard catch-up limit is $7,500, those ages 60–63 could contribute up to $11,250 instead. This extra boost is meant to help people nearing retirement save more during their final working years.
2. Higher-Income Earners Must Use Roth Contributions
Starting in 2026, anyone who earned more than $145,000 in wages from their employer in the previous year (adjusted for inflation each year) will have to make their catch-up contributions as Roth contributions. That means:
- The money will be contributed after taxes, not pre-tax.
- Future withdrawals from the Roth portion will be tax-free, if certain rules are met.
- If your employer’s plan does not offer a Roth 401(k) option, you may temporarily lose the ability to make catch-up contributions until that feature is added.
Who Is Affected?
- All workers age 50 and older who make catch-up contributions.
- Workers age 60–63 who can take advantage of the higher limit starting in 2025.
- Higher-income employees earning more than $145,000 in the prior year who will be required to make Roth catch-ups beginning in 2026.
Why This Matters These changes could affect how much you can save and how your contributions are taxed.
- The new higher limits give you a chance to save more in the years leading up to retirement.
- The new Roth rule may change your short-term tax picture, since you’ll pay taxes on catch-up contributions now instead of later.
- Some employers may need to update their plans to include Roth options, so it’s a good idea to check with your HR or benefits department.
What You Can Do Now
- Check your employer’s plan. Confirm whether it allows Roth 401(k) contributions. If not, ask whether it will be updated before 2026.
- Review your income. If you earn more than $145,000, expect your catch-up contributions to switch to Roth soon.
- Plan ahead for taxes. Paying tax now on Roth contributions can make sense if you expect to be in a higher tax bracket in retirement.
- Maximize your savings. If you are between 60 and 63, consider how you can take advantage of the higher contribution limit in 2025.
- Work with an advisor. A financial professional can help you adjust your savings strategy so you don’t miss out on opportunities or get caught off guard by the changes.
Catch-up contributions are one of the best ways to build additional savings in your final working years. The coming changes mean more opportunity for some savers, but also new tax and plan considerations for others.
At Gregory Ricks & Associates, our goal is to help clients make the most of every retirement savings opportunity. We can walk you through how these new rules apply to your situation and help you plan your next steps. Schedule a free, no-obligation 15-minute consultation by phone or Zoom today by clicking the button below.
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