As we reach the halfway point of the year, now is a good time to review your retirement savings strategy. One important area to check is whether you are fully taking advantage of “catch-up contributions” if you are age 50 or older.
New rules under the SECURE 2.0 Act will change how catch-up contributions work for some higher-income employees, primarily in employer-sponsored retirement plans such as 401(k) and 403(b) plans. Most changes will apply after an IRS transition period that generally runs through 2025, with full implementation in many plans beginning in 2026.
Here are the key points to understand during your mid-year financial checkup.
Catch-Up Contributions After Age 50
If you are age 50 or older by the end of the year, you are allowed to contribute extra amounts to retirement plans once you have reached the regular annual limits.
For 2026, the standard catch‑up limits are:
- 401(k), 403(b), and most employer plans: $8,000
- SIMPLE 401(k) and SIMPLE IRA plans: $4,000
- Traditional and Roth IRAs: $1,100
These amounts are in addition to the regular contribution limits.
Higher Limits for Ages 60–63
SECURE 2.0 also increased the catch‑up limit for individuals ages 60 through 63, if the employer’s plan offers this option.
For 2026:
- 401(k), 403(b), and most employer plans: $11,250.
- SIMPLE 401(k) and SIMPLE IRA plans: $5,250.
If your plan allows this option, the age 60-63 limits replace the standard age 50 catch‑up amount for those years.
New Roth Requirement for Some Higher‑Income Employees
Under SECURE 2.0, some higher‑income employees may be required to make catch-up contributions as Roth contributions instead of pre‑tax contributions, if their employer’s plan offers Roth catch-up contributions.
The rule applies to employer plans such as 401(k), 403(b), and governmental 457(b) plans. It does not apply to SIMPLE IRAs or SEP plans.
For 2026, the wage threshold is $150,000 (based on your prior‑year FICA wages from that employer). Employees below this level are generally not affected.
How Plans Will Handle These Rules
In many cases, employers will automatically treat catch-up contributions as Roth for employees who are above the income threshold, depending on how the plan is designed.
Employers are responsible for tracking wages, and if you work for multiple employers, the wages are not combined for this rule.
What This Means for You
As part of your mid-year financial checkup, consider the following:
- Make sure you are taking full advantage of catch-up contributions if you are age 50 or older
- Check whether your income may place you above the Roth threshold for your employer’s plan
- If you are ages 60–63, ask whether your plan offers the higher catch-up limits
- Review whether pre-tax or Roth contributions make more sense for your overall tax situation
The Bottom Line
Catch-up contributions remain one of the most effective ways to build retirement savings after age 50. While the new Roth rules add some complexity for higher-income employees, most of the changes will be handled automatically by your employer’s retirement plan.
As part of your mid-year financial checkup, it is a good time to review your contribution levels and make sure you are maximizing the savings opportunities available to you.
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