With year-end planning underway, catch-up contributions for individuals age 50 and older who participate in employer-sponsored retirement plans can be an effective way to boost savings and potentially reduce 2026 taxable income. But changes under the SECURE 2.0 Act have added a few wrinkles to this strategy, making it especially important to understand how the rules may affect you

Contribution limits

Individuals age 50 and older have long been permitted to make additional “catch-up” contributions to certain employer-sponsored retirement plans, subject to annual inflation-adjusted limits. In 2026, eligible participants may contribute up to $8,000 beyond the standard $24,500 limit for 401(k), 403(b) and 457(b) plans, for a total of $32,500.

Under SECURE 2.0, participants age 60 to 63 can make up to $11,250 in catch-up contributions to these plans, bringing the maximum to $35,750 for 2026.

Before 2026, employees could make catch-up contributions pretax to traditional plans or, if their employer offered the option, after-tax to Roth plans. Pretax contributions reduce taxable income in the year they’re made, but distributions are generally taxable. Roth contributions don’t reduce current-year taxable income, but distributions are generally tax-free.

New Roth rules

SECURE 2.0 mandates that, effective January 1, 2026, catch-up contributions made by higher-income employees to 401(k), 403(b) and 457(b) plans be contributed on a Roth basis. For 2026, the Roth requirement applies to participants whose 2025 Social Security wages from the employer exceeded $150,000, as reported in Box 3 of Form W-2, “Wage and Tax Statement.” The $150,000 threshold is adjusted annually for inflation.

Plans that didn’t offer a Roth option in 2025 had to either add one for 2026 or eliminate higher-income participants’ ability to make catch-up contributions. So, if the Roth requirement applies to you and your retirement plan doesn’t offer a Roth option, you won’t be able to make catch-up contributions in 2026.

Ask your employer about your options. It may have implemented a “deemed election” approach for employees subject to the new rules. This automatically treats catch-up contributions as Roth contributions unless the employee opts out.

Remember, unlike pretax catch-up contributions, Roth catch-up contributions don’t reduce current-year taxable income. Your 2026 taxable income will generally be higher than it would be if you were making pretax catch-up contributions. This may reduce or eliminate the benefits of tax breaks that are subject to phaseouts, floors or other income-based limits and even push you into a higher tax bracket.

Boost potential tax savings

If you’re not subject to the new Roth catch-up requirement and you’re eligible to make pretax catch-up contributions, making those contributions by year end may reduce your 2026 taxable income.

Keep in mind that changes to payroll deferral elections generally aren’t reflected immediately in paychecks. Depending on your employer, it may take several payroll cycles before a higher contribution amount takes effect. That’s one reason to review your contribution rate sooner rather than later.

Seek guidance

If you’re age 50 or older, the final months of the year may provide an opportunity to fine-tune both your retirement savings and tax planning strategies. Whether you’re increasing catch-up contributions or evaluating the impact of the Roth requirements, acting now can help you make the most of the options available to you. Contact your tax advisor to discuss strategies that may help you meet your retirement and tax-saving goals.