SECURE 2.0 Catch-Up Contribution Changes: What You Need to Know
If you’re age 50 or older, the IRS gives you the chance to “catch up” on your retirement savings by contributing more than the standard annual limit. These extra contributions can make a big difference in building a stronger retirement nest egg, especially if you got a late start or had years when saving wasn’t easy.
The SECURE 2.0 Act, passed in late 2022, introduced several key updates to these catch-up rules. Some are already in place, while others are set to take effect soon. Here’s what you should know to make the most of these opportunities.
What Are Catch-Up Contributions?
Once you turn 50, you can contribute more to your retirement plan than younger workers. For example, in 2025, you can put up to $23,000 into a 401(k) or 403(b), and an additional $7,500 as a catch-up contribution. IRA owners can also make a $1,000 catch-up contribution (and starting in 2024, that IRA catch-up amount is indexed for inflation).
These “bonus” contributions can have a real impact — especially if you’re in your peak earning years and want to close the gap before retirement.
New Roth Requirement for Higher Earners (Starting 2026)
Beginning January 1, 2026, the SECURE 2.0 Act requires certain higher earners to make their catch-up contributions on a Roth basis.
Here’s how it works: if you earn more than $145,000 in wages (adjusted annually for inflation) from your employer in the prior year, your catch-up contributions will automatically be after-tax. In other words, you’ll pay tax on that money now, but your withdrawals in retirement will be tax-free.
If you earn less than the threshold, you can still choose between pre-tax and Roth, depending on what your plan allows.
While this change removes the immediate tax deduction for some, it’s not necessarily a bad thing. Building up Roth money can provide valuable tax diversification in retirement, giving you more flexibility in managing taxable income later on.
Bigger Catch-Up Limits for Ages 60–63 (Starting 2025)
For those nearing retirement, SECURE 2.0 provides an even bigger savings boost. Starting in 2025, workers who are ages 60 through 63 will be able to contribute 150% of the standard catch-up limit, or $10,000, whichever is greater (indexed for inflation).
That means if the regular catch-up limit is $7,500, someone in that age range could contribute up to $11,250 in additional savings. These “super catch-ups” can help you maximize your retirement plan during your final, high-earning years.
What You Can Do Now
Here are a few simple steps to prepare for these changes:
1. Check your income level. If you expect to earn more than $145,000, be ready for your catch-ups to switch to Roth in 2026.
2. Confirm your plan options. Not all employer plans currently offer a Roth feature, but they’ll need to by 2026 if they allow catch-ups.
3. Review your tax strategy. Since Roth contributions are after-tax, it’s smart to evaluate how this shift affects your take-home pay and tax bracket.
4. Plan ahead for your early 60s. If you’ll be 60–63 in 2025 or later, consider increasing your savings rate to take advantage of the higher limits.
The Bottom Line
The SECURE 2.0 Act gives savers more ways to boost their retirement funds — especially those in their 50s and early 60s. While the Roth requirement for higher earners changes the tax timing, the long-term benefits of tax-free income in retirement can be significant.
By planning ahead and understanding how these new rules affect you, you can make the most of your peak earning years and enter retirement with greater confidence and flexibility.
