Retirement Catch-up Contribution Changes

For years, retirement plans have allowed employees aged 50 and older to make catch-up contributions-additional amounts beyond the standard elective deferral limit–to help accelerate savings as retirement approaches. In 2025, the IRS has set the standard deferral limit at $23,500 for plans such as 401(k), 403(b), and 457(b). eligible participants may contribute an additional $7,500 in catch-up contributions, bringing their total potential contribution to $31,000, assuming the plan permits it.

SECURE 2.0 introduces two significant updates to this framework. First, beginning with taxable years after 12/31/25, employees aged 50 and older who earn more than $145,000 will be required to make their catch-up contributions on a Roth basis. Second, starting in taxable years after 12/31/24, participants aged 60 to 63 may be eligible to contribute even more under expander “super catch-up ” limits.
If plans do not offer designated Roth contributions, it must add a Roth feature by 1/1/26 to continue allowing catch-up contributions. Otherwise, catch-up contributions would not be permitted by any plan participant.

Under the SECURE 2.0 Act, beginning 1/1/26, employees aged 50 or older who earned more than $145,000 in FICA wages from the plan-sponsoring employer in the prior calendar year must make their catch-up contributions to designated Roth accounts. Thee contributions are after-tax, meaning they are included in gross income in the year contributed; allow for tax-free withdrawals of both contributions and earnings if certain conditions are met; apply to 401(k), 403(b) and governmental 457(b) plans; and do not apply to SIMPLE IRA or SEP plans.

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