Big Changes Coming to Retirement Plans: What You Need to Know About Catch-Up Contributions

Jarrett E. Hindrew, CFP®, ChFC®, CLU®, Financial Advisor
Creative Financial Group, a Division of Synovus Securities, Inc.

If you're age 50 or older and saving for retirement, you may be eligible to make “catch-up contributions”—extra money you can add to your retirement account each year. Starting in 2026, new IRS rules will change how these contributions work, especially for higher earners and people in their early 60s.

What’s Changing?

Under the SECURE 2.0 Act, the IRS has finalized new rules that affect how catch-up contributions are made in retirement plans like 401(k), 403(b), 457(b), SIMPLE IRA and SIMPLE 401(k).

Catch-Up Contributions for Age 50-Plus

• If you're age 50 or older, you can contribute an additional $7,500 (2025 limit) to your retirement plan beyond the standard annual limit.
• This amount is adjusted for inflation each year.
• Catch-up contributions help older workers boost their retirement savings as they approach retirement.

Bigger Limits for Ages 60–63

• Starting in 2025, people aged 60 to 63 may be allowed to contribute even more than the regular catch-up limit.
• This special limit is $10,000 or 150% of the standard catch-up amount, whichever is greater. The limit for 2025 is $11,250.
• Not all plans offer this higher limit, but if they do, it must be available to everyone in that age group.

Roth-Only for High Earners

• Beginning in 2026, if you earned more than $145,000 in Social Security wages the prior year, any catch-up contributions you make must go into a Roth account in your employer sponsored retirement plan.
• Roth contributions are taxed now but grow tax-free for retirement.
• If your plan doesn’t offer Roth contributions, you won’t be able to make catch-up contributions at all.

How Wages Are Counted?

• The IRS will use Box 3 of your prior year’s W-2 form (Social Security wages) to determine if you’re over the $145,000 threshold.
• Employers using Box 5 (Medicare wages) are considered compliant until January 1, 2027.

Important Note for Self-Employed Individuals

• The IRS regulations confirm that this Roth-only rule does not apply to individuals who don’t have prior-year W-2 wages. For example, if you’re self-employed and do not have W-2 wages, your contributions to a Solo 401(k) plan are not subject to the Roth catch-up requirement.

Fixing Mistakes

• If your plan makes a small mistake (under $250), or if your income was updated late due to a corrected W-2, your plan doesn’t have to fix it.

When Does This Start?

• The Roth-only rule starts January 1, 2026.
• In 2026, employers are expected to follow a “reasonable good faith” effort to comply. The full set of final rules becomes official on January 1, 2027.

What You Can Do

• Check your income: If you earned more than $145,000 in Social Security wages the prior year, talk to your employer or plan provider about Roth options.
• Review your plan: Not all retirement plans offer Roth contributions or the higher catch-up limit for ages 60–63.
• Stay informed: These rules are new and evolving, so keep an eye out for updates from your employer or financial advisor.

These changes are designed to help people save more for retirement, especially during peak earning years. If you're unsure how this affects you, now’s a great time to ask questions and make sure your plan is ready.

Sources:

https://www.federalregister.gov/documents/2025/09/16/2025-17865/catch-up-contributions