The IRS has issued final regulations under the SECURE 2.0 Act modifying catch-up contributions rules for retirement plans. Employees aged 60-63 may use higher catch-up contribution limits.
High-earners above a wage threshold will be required to make their catch-up contributions as Roth contributions (after taxes). These changes aim to encourage saving while aligning tax treatment more uniformly among higher earners and older workers.
Increased Catch-Up Contribution Limits for Ages 60-63
Under SECURE 2.0, starting in 2025, retirement plans may offer a super catch-up contribution option for participants aged 60 through 63, allowing them to contribute more than the standard catch-up amount.
The higher limit is designed to give those closer to retirement extra opportunity to boost savings. This increased contribution limit applies to 401(k), 403(b), and governmental 457(b) plans, and also to SIMPLE plans under certain conditions.
Mandatory Roth Catch-Up for High Earners
Starting taxable years after December 31, 2026, catch-up contributions made by participants whose prior-year wages exceed $145,000 (indexed for inflation) must be designated as Roth contributions. That means they must be made with after-tax dollars. Plans must comply with this Roth requirement for eligible participants. Plans that do not already offer a Roth option may be affected or may need amendments.
Applicability, Compliance, and Good Faith Relief
The new catch-up rules generally apply for tax years beginning after December 31, 2026. Plans must be amended by that date. There is a “reasonable, good-faith interpretation” relief for compliance in 2026 for those making earlier efforts.
Governmental plans and collective bargaining plans have some extended deadlines. Plan administrators must ensure notices, definitions of high wages, and whether catch-ups are Roth are correctly implemented.
Key Figures & Effective Dates for SECURE 2.0 Catch-Up Rules
| Rule Element | Value or Threshold | Effective Date | Who Is Affected |
|---|---|---|---|
| Wage threshold for Roth catch-ups | $145,000 (indexed) | Taxable years after Dec 31, 2026 | High-earning employees age 50+ |
| Increased catch-up limit for ages 60-63 | “super catch-up” vs standard catch-up | Plans may offer higher limit starting Jan 1, 2025; regulated in final regs by 2027 | Employees aged 60-63 in eligible plans |
| Plan amendment deadline | By Dec 31, 2026 for most plans | Applies to many 401(k), 403(b), 457(b) plans | Plan sponsors & employers |
| Good faith compliance relief | Applies for tax year 2026 before full enforcement | During transition period | Employers and participants preparing for full rule change |
| Governmental / collective bargaining plans | Extended deadlines and special conditions | Later than standard plans after 2026 | Plans under government or unions |
What Participants and Employers Need to Do
Employers and plan administrators should update plan documents and communication materials to reflect required Roth catch-up rules, clarify eligibility criteria including wage thresholds, and offer the increased catch-up option for ages 60-63 if they wish.
Participants age 50 or over should assess whether they will meet the earnings threshold, consider whether Roth contributions (after-tax) versus pre-tax are better, and plan accordingly. Both sides must prepare for compliance beginning in 2027 with some flexibility in 2026.
The SECURE 2.0 Act’s finalized catch-up rule changes mark a major shift by mandating Roth catch-up contributions for high-earners and offering increased limits for older employees aged 60-63.
With effective enforcement for most plans beginning after December 31, 2026, participants and plan sponsors should prepare now. Understanding thresholds, plan eligibility, and timing will help ensure retirement saving remains maximized and compliant under the new rules.
FAQs
Will everyone age 50 or over now pay tax on their catch-up contributions?
No. Only those whose prior-year wages exceed the $145,000 threshold will be required to make catch-up contributions as Roth (after tax). Others can still use pre-tax catch-ups if the plan allows.
How much more can people aged 60-63 contribute under the “super catch-up” option?
They can contribute a higher catch-up-limit compared to the standard catch-up for age 50+, which allows significantly greater contributions in eligible plans starting in 2025, though exact limit depends on the type of plan.
What happens if my plan doesn’t offer a Roth option?
If the plan lacks a Roth feature and you are subject to the Roth catch-up requirement, you may be unable to make catch-up contributions unless the plan is amended. Employers may need to add a Roth option or adjust plan terms.