10.27.25

New Rules Curb 401(k) Catch-Ups for High Earners

by: Ben Mattlin

Starting next year, high earners making $145,000 or more will face new IRS rules limiting 401(k) catch-up contributions. Workers aged 50 and older have long been able to boost retirement savings with extra contributions, but under the SECURE 2.0 Act, high-income participants must now make these contributions to Roth 401(k)s, paying taxes upfront, instead of traditional pre-tax accounts. While this reduces short-term tax benefits, Roth contributions grow tax-free and are exempt from required minimum distributions, potentially offering long-term advantages. Employers will need to add Roth options or stop allowing catch-ups. Advisors suggest viewing the change as an opportunity to diversify retirement accounts and manage future tax exposure more efficiently. Most workers, however, will not be affected by the new limits.

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