401(k) Catch-Up: Higher Earners Do this now

The Treasury and IRS have finalized long-anticipated Secure 2.0 rules for 401(k) and workplace plan “catch-up” contributions—and higher earners need to take note. Starting in 2027, workers age 50+ making over $145,000 at their current job will generally have to make these extra contributions as Roth (after-tax) dollars, rather than the traditional pre-tax contributions allowed in the past. Some employer plans could make the switch as soon as 2026, but for now, eligible workers still have a window to choose between pre-tax and Roth catch-up contributions, assuming their plan allows both.

As I told CNBC for their article, "Now is the time to work with your advisor or tax preparer to run multi-year tax projections." This isn’t just tax jargon—multi-year projections help you decide whether to front-load pretax catch-up dollars while you still can, or take the opportunity to “embrace the transition to Roth” earlier, especially if you expect to be in a higher bracket later on. Your current cash flow, plan design, and big-picture financial goals all play a part.

The article also highlights that while Americans can contribute up to $23,500 (plus a $7,500 catch-up if age 50 or over) to their 401(k) in 2025, only 16% of eligible participants actually make those extra catch-up contributions—a figure skewed toward high earners. With new Roth-only restrictions looming, the choice between pre-tax and Roth for future contributions becomes even more crucial—and more individualized—than ever before.

Bottom line? Don’t sit on the sidelines as these rules change: proactive planning now will minimize your future tax bill and maximize retirement flexibility. Review your cash flow, revisit your retirement account mix, and use the next year or two as a strategic window—because, after 2026, the landscape for catch-up contributions will look very different for high-income savers.