On January 10, 2026, the IRS released proposed regulations that provide long-awaited guidance on changes to 401(k) catch-up contributions under the SECURE 2.0 Act of 2022. These updates will impact individuals nearing retirement and higher-income earners. If you’re a business owner or employee approaching retirement age, understanding the new rules is critical—especially as we head into the 401k 2026 contribution limit IRS changes.
What Are 401(k) Catch-Up Contributions?
Catch-up contributions give employees aged 50 or older the chance to save more for retirement by going beyond the standard IRS contribution limits.
Key points to know:
- Eligibility: You qualify in the year you turn 50, even if your birthday is later in the year. For non-calendar plans, you can still contribute if you’ll be 50 by year-end.
- Limits: In 2026, the standard 402(g) limit is $23,500. Those eligible can contribute an extra $7,500, bringing the total to $31,000.
- Testing: Catch-up contributions do not count against annual contribution (415(c)) or nondiscrimination (ADP) testing. They can also be reclassified to help plans pass testing.
- Tax Treatment: Contributions can be pre-tax or Roth, depending on what your plan allows. Pre-tax reduces taxable income now, while Roth contributions grow tax-free.
- Plan Requirements: Not all plans allow catch-up or Roth contributions. Always check your Summary Plan Description (SPD).
SECURE 2.0 Updates to 401(k) Catch-Up Rules
1. Higher Catch-Up Contributions for Ages 60–63
Starting in 2026, individuals aged 60 to 63 can contribute more than the standard catch-up limit.
Calculate Your 2026 COLA Increase →- New Limit: The greater of $10,000 or 150% of the regular catch-up limit. For 2026, this equals $11,250.
- Age Range: Applies beginning the year you turn 60 through the year you turn 63.
- Indexing: The $10,000 figure will be adjusted for inflation starting in 2026.
Example for 2026:
| Age | Catch-Up Limit | Standard 402(g) Limit | Total Contribution Allowed |
|---|---|---|---|
| 50–59 | $7,500 | $23,500 | $31,000 |
| 60–63 | $11,250 | $23,500 | $34,750 |
| 64+ | $7,500 | $23,500 | $31,000 |
This rule takes effect for tax years beginning after December 31, 2026.
2. Roth Requirement for High Earners
Another major change impacts high earners.
- If you earn more than $145,000 in FICA wages (adjusted annually for inflation), all catch-up contributions must be made on a Roth basis.
- If your employer’s plan does not offer Roth contributions, you cannot make catch-up contributions.
- Originally planned for 2026, this requirement has been delayed and now applies starting in 2026.
This makes the 401k 2026 contribution limit IRS rule especially important for employees and employers to plan around.
What Employers Should Do Now
Employers need to act early to stay compliant and help employees maximize their retirement savings:
- Update Retirement Plan Documents
- Ensure your plan allows Roth contributions.
- Work with providers to update plan language.
- Coordinate With Payroll Providers
- Track compensation to determine who exceeds the $145,000 threshold.
- Apply the right contribution limits by age and income.
- Work With Your 401(k) Provider
- Confirm how higher catch-up limits will be tested.
- Ask about Roth recharacterization options.
- Educate Employees
- Communicate changes clearly, especially to employees over 50.
- Highlight the upcoming Roth requirement for high earners in 2026.
The SECURE 2.0 Act has made significant changes to 401(k) catch-up contributions, especially for employees aged 60–63 and those earning above $145,000. With the 401k 2026 contribution limit IRS rule requiring Roth contributions for high earners, both employees and employers need to prepare now. Reviewing plan documents, coordinating with payroll, and educating employees will ensure a smooth transition into the new rules.
