Should higher earners still make 401(k) catch‑up contributions?

Since 2002, retirement savers age 50 and over have had the option of making “catch-up” contributions to their 401(k) plans, which stack on top of the regular limits for employee contributions to tax-deferred retirement plans. The amounts were limited to $1,000 per year when they first came out but expanded to $7,500 by 2025.

In addition, contributions to tax-deferred retirement plans are excluded from adjusted gross income, resulting in a lower tax bill on income that would otherwise be taxed. For example, a 50-year-old employee who contributed the $23,500 maximum to her retirement plan in 2025 plus the $7,500 catch-up amount would have effectively shielded $31,000 from current-year taxes, resulting in a tax break of $7,440 for someone in the 24% tax bracket.

New for 2026: One tax break goes away with Secure 2.0

But starting this year, these tax breaks will be off-limits for some retirement savers. That’s because of a new provision from  Secure 2.0  that went into effect on Jan. 1, 2026. Individuals who earned more than $145,000 in prior-year wages from their current employer (indexed for inflation) will only be able to make catch-up contributions to a Roth 401(k), meaning the contribution amount will be subject to taxes upfront.

For a higher-earning 50-year-old who contributes the $8,000 maximum catch-up amount to a Roth 401(k) in 2026, those dollars won’t be deducted from adjusted gross income. As a result, taxes paid for this year would be about $1,920 higher (assuming a 24% tax bracket) than they would have been if the catch-up amount had gone to a traditional 401(k). Paying taxes upfront makes these contributions less attractive than they were previously, especially for retirement savers who expect to be in a lower tax bracket in retirement.

Why you might still want to make catch-up contributions

Even without a tax break, you’ll probably still want to contribute the extra amount if you’re running behind on retirement savings. If you contribute the full catch-up amount (currently $8,000) starting at age 50 and continue doing so through age 65, you could make total contributions of $120,000 or more over that period. If you’re between 60 and 63, you can contribute even more as a “super catch-up” of up to $11,250 per year, with contributions for higher earners subject to the same rules as the regular catch-up contributions.

A 50-year-old who maxes out on catch-up and super catch-up contributions could end up with about $200,000 (assuming a 5% annual return) in the Roth 401(k) by age 65.

The tax advantages of a Roth 401(k)

Why you might want to skip making catch-up contributions

It’s important to note that funds contributed to a Roth 401(k) may not be eligible for matching contributions from your employer. Employers were previously required to treat matching contributions as pretax contributions, meaning that matching contributions to a Roth 401(k) weren’t allowed. Secure 2.0 loosened up these restrictions, but not all employers have updated their plans.

On balance, though, I’d lean in favor of continuing to make catch-up contributions if you can, even though they no longer help reduce taxable income before retirement.

One final note: If you qualify as a higher earner but your employer’s plan doesn’t offer a Roth 401(k) option, you won’t be able to make these catch-up contributions.

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