The New Catch-Up Retirement Law Might Not Help You — How To Tell

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Catch-up retirement contributions have felt like a no brainer for workers over 50. Why not save more later in your career if you can, and lower your tax bill at the same time?

However, a key provision in SECURE 2.0 has changed that for higher earners. Catch-up contributions may no longer offer the tax break you’ve come to expect. 

How SECURE 2.0 Changed Catch Up Contributions

Starting on Jan. 1, 2026, SECURE 2.0 includes a rule that affects the way you can make catch-up contributions in employer-sponsored plans like 401(k) and 403(b) accounts. 

According to the IRS, workers whose FICA wages exceed a certain threshold in the prior year need to make their contributions as after-tax, or Roth contributions instead of pre-tax. The threshold is $150,000 for 2026. This income threshold doesn’t apply to IRAs, SEP plans or SIMPLE IRAs. 

The statutory threshold is $145,000, indexed for inflation, which is why many summaries refer to it as roughly $150,000 going forward. Importantly, this income test is based solely on W-2 Social Security wages from the employer sponsoring the plan, not adjusted gross income or household earnings. The rule does not apply to IRAs, SEP plans or SIMPLE IRAs.

What this means is that you can still make contributions, but you won’t receive tax deductions. Since Roth contributions are made with after tax dollars, your contributions still count as taxable income in the tax year you make them. 

If your employer-sponsored plan doesn’t offer Roth contributions, then higher earners may not have the opportunity to make catch up contributions at all. 

Other Ways to Aggressively Save for Retirement

There are other ways to increase your retirement savings if you’re not able to make catch-up contributions in your employer sponsored retirement account. For one, you can start by opening up an IRA and making contributions to that. There may be limits based on your income and other factors, so check what the rules are before making any additional contributions.

For those with qualifying high deductible health plans, you can consider a health savings account, or HSA. You can make contributions with pre-tax dollars and the money grows tax free. Withdrawals are tax free if you use them for qualified medical expenses. Otherwise, you may be taxed similarly to a Roth IRA. 

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