SECURE Act 2.0 Changes Are Reshaping Catch-Up Contributions In 2026
- SiekmannCo
- 4 days ago
- 3 min read
What High Earners, Plan Sponsors, & Older Workers Need To Know For Smarter Retirement Planning
The SECURE Act 2.0 introduced sweeping updates to the U.S. retirement system, but few provisions have generated as much attention as the changes to catch-up contributions. Beginning Jan. 1, 2026, new rules that significantly alter how certain employees can save for retirement, particularly higher earners who are age 50 or older, went into effect.
Although these changes were originally scheduled to take effect in 2024, the IRS granted a two-year administrative delay to allow employers, payroll providers, and recordkeepers time to prepare. With implementation now upon us, understanding how these SECURE Act 2.0 changes affect catch-up contributions is critical for effective retirement planning.
Who Is Impacted by the New Catch-Up Contribution Rules?
Not every participant will be affected in the same way. The updated rules apply specifically to certain employees based on income, age, and plan type.
You may be impacted if you meet the following criteria:
You are age 50 or older by the end of the plan year.
You participate in a 401(k), 403(b), or governmental 457(b) plan.
You earned more than $150,000 in FICA wages from your current employer in the prior calendar year.
IRAs, SIMPLE IRAs, and SEP plans are excluded from these SECURE Act 2.0 changes.
Mandatory Roth Treatment For High Earners
One of the most significant changes involves how catch-up contributions are taxed. Starting in 2026, employees who earned more than $150,000 in prior-year FICA wages must make all catch-up contributions on a Roth, after-tax basis.
Key points to understand include:
Standard employee deferrals may still be made on a pre-tax basis, up to the annual deferral limit.
Catch-up contributions for affected high earners must be Roth. Pre-tax catch-up contributions will no longer be allowed.
The $150,000 wage threshold is indexed to inflation, but always based on wages from the current employer only.
Employees earning $150,000 or less retain flexibility and may choose between Roth or pre-tax catch-up contributions.
Updated Catch-Up Contribution Limits For 2026
SECURE Act 2.0 also enhanced contribution limits for older workers, creating new planning opportunities.
For 2026:
The standard catch-up contribution limit for individuals age 50 and older is $8,000.
A higher “super catch-up” limit applies to participants ages 60 through 63.
Eligible participants in that age range may contribute up to $11,250, or 150 percent of the standard catch-up limit.
This expanded window allows certain late-career employees to accelerate savings during peak earning years, making thoughtful retirement planning even more important.
What Employers & Plan Sponsors Need To Address
The administrative impact of these SECURE Act 2.0 changes should not be underestimated. Employers and plan sponsors will need to coordinate closely with recordkeepers and payroll providers to ensure compliance.
Key considerations include:
Plans that do not offer a Roth option will effectively prohibit high earners from making catch-up contributions.
Payroll systems must track prior-year FICA wages accurately.
Catch-up contributions may need to be automatically reclassified as Roth once deferral limits are reached.
During 2026, the IRS is allowing a reasonable good-faith compliance period, with stricter enforcement beginning in 2027.
Failure to address these requirements could limit employee savings opportunities and increase compliance risk.
What This Means for Retirement Planning
For employees, these changes may shift long-term tax strategies, especially for those nearing retirement. Roth catch-up contributions increase taxable income today but can provide tax-free income in retirement. For employers, plan design decisions will directly affect participant outcomes.
This is an ideal time to review plan features, employee communications, and overall retirement strategy.
Get Guidance From The Siekmann Company
The SECURE Act 2.0 changes to catch-up contributions represent one of the most complex retirement planning updates in recent years. Whether you are an employer evaluating plan design or an individual assessing how Roth requirements affect your savings strategy, expert guidance matters.
If you have questions or would like help navigating these changes, contact info@siekmannco.com. Our team can help you understand your options, stay compliant, and make confident decisions that support long-term retirement success.
