If you’re a high earner over 50 planning for retirement, you likely maximize your 401(k), 403(b), or governmental 457(b) plan with catch-up contributions. For 2026, the standard annual contribution climbs to $24,500, but those 50 and older can add a standard catch-up of $8,000, while a “super” catch-up of $11,250 is available for taxpayers aged 60 through 63. These extra contributions have long been a favorite tax strategy because they allow you to save more pre-tax dollars while reducing your current taxable income.
But there’s a curveball in 2026: Starting January 1, 2026, the rules change for anyone earning more than $150,000 in 2025. Every dollar you allocate in catch-up contributions has to go into the Roth side (not pretax) of your 401(k). This single curveball wipes out the upfront tax break you used to get on those catch-ups, which can easily add a few thousand dollars to your 2026 tax bill. Keep in mind, only wages from the sponsoring employer plan count. Spousal income, investment income, or wages from a side hustle don’t apply.
The good news? Your regular contributions, up to the $24,500 limit in 2026, can still be pre-tax, so you’re not losing everything. The bad news? If you were counting on that catch-up deduction to keep your taxes in check, it’s time to rethink the plan.
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The IRS finalized this rule in September 2025, and it’s a hard hit for a lot of higher earners in their 50s and early 60s. If you’re used to getting that big deduction every year, your 2026 tax bill could easily jump by a few thousand dollars unless you’re prepared.
Why this feels like a curveball
SECURE 2.0 was all about getting more people to save for retirement, but this one rule quietly pushes higher earners straight into Roth contributions instead. With Roth contributions, you pay tax now but enjoy tax-free withdrawals later, especially useful if you think your tax rate will be higher in retirement.
The plot twist? You no longer get to choose. If you’re a higher earner, the IRS now forces all catch-up dollars into a Roth, with no more traditional pre-tax option, even if you’re in a high tax bracket right now and would rather get the deduction today. Plus, if your plan doesn’t already offer Roth options, you could be locked out of catch-ups entirely until it’s updated.
Even in light of this change, there is good news. Plans get a “good faith” compliance grace period through 2026, with full enforcement in 2027. That gives employers wiggle room to adapt to the change. But for you, the saver, the clock is ticking; 2025 is your last year for unrestricted pre-tax catch-ups, according to the IRS.
(Image credit: Getty Images)
Key changes and limits for 2026
The base contribution limit on 401(k)s, 403(b)s, and 457s rises to $24,500 (up from $23,500 in 2025), with catch-ups of $8,000 if you’re age 50 or older and a super catch-up of $11,250 if you’re age 60-63. SIMPLE IRAs see similar changes, but the Roth rule applies mainly to employer-sponsored plans like 401(k)s. Bottom line: You’re still eligible for the full amount, but the upfront tax treatment just got pricier.
“Keep in mind that the mega backdoor Roth is still allowed under current law, making 2025 an important year to review your strategy, maximize any remaining pre-tax opportunities, and consider whether larger Roth moves make sense while the rules remain unchanged,” said Brian Colvert, CEO/CFP® at Bonfire Financial. “Front-loading your planning in 2025 will help you stay ahead of what is coming.”
What this means for your wallet
Typically, you benefit from immediate tax savings by reducing your taxable income when you make catch-up contributions to your retirement account. However, with this new change for 2026, high earners will now have to pay taxes upfront on the full amount of their income instead of enjoying that immediate break.
But there is an upside, long-term. Roth catch-ups excel if you anticipate higher taxes in retirement or you want to leave a tax-free inheritance for your kids. Plus, there are no required minimum distributions (RMDs) on Roth 401(k)s until you roll them over.
A Plan Sponsor Council of America (PSCA) survey found that 96% of 401(k) plans now include Roth provisions, meaning only about 4% lack them — a big jump from earlier years. If you’re in the 4%, talk to your HR department, or you might forfeit catch-ups.
What to do next
Don’t let this new curveball destroy your 2026 retirement strategy. With 2025 winding down, the time to make 2025 contributions is nearly done. But here’s what you can do to end the year strong and get started in the new year on the right foot.
- Max out 2025 contributions: If eligible, max out your contribution up to $31,000 ($23,500 + $7,500 catch-up) this year. Remember, the deadline is December 31 for most plans.
- Audit your plan: Confirm Roth availability and super catch-up options with your employer.
- Weigh the impact: Compare the tax impact of a Roth versus putting extra savings into a taxable account. Contributing to a Roth could be a wise decision if you expect to be in a higher tax bracket in the future.
- Get help (if needed): Talk with a financial advisor or reach out to your HR department at work. Factor in your tax bracket, expected retirement income and state taxes. Kiplinger tools can help.
- Diversify beyond your 401(k): Check out IRAs. They have no Roth requirement for catch-ups. Consider a backdoor Roth IRA if your income phases you out of direct contributions.
- Stay Informed: Watch for IRS Notice 2025-67 for final tweaks, and bookmark irs.gov for updates.
Plan now to save in the future
Melissa Murphy Pavone CFP®, CDFA® and Founder at Mindful Financial Partners summarizes it best. “This 2026 change is a wake-up call for high earners over 50. Catch-up contributions are still valuable, but the tax strategy behind them is changing dramatically.”
She also cautions that not all advisors understand these new rules. And not all advisors will prioritize tax analysis in retirement planning. That’s why it’s important to reach out to a qualified financial advisor with questions. They have the answers.
This curveball isn’t quite a strikeout. Instead, it’s a chance to rethink your retirement strategy (and 2026 New Year’s resolutions). High earners like you have the resources to adapt, but acting while you still have time could save you a tidy sum in taxes over time.
