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Should higher earners still make 401(k) catch‑up contributions?
Higher earners with wages over $145,000 must make post-tax catch-up contributions to Roth 401(k)s starting in 2026 under Secure 2.0, changing their tax treatment upfront.
- Starting this year, higher-earning retirement savers must make catch-up contributions as Roth 401s, per Secure 2.0 that went into effect on Jan. 1, 2026.
- Since 2002, catch-up contributions for savers age 50 and over have expanded to a $7,500 limit by 2025 and were excluded from adjusted gross income, giving immediate tax relief.
- For a higher-earning 50-year-old, the $8,000 catch-up contribution to a Roth 401 raises taxes this year by about $1,920 at a 24% tax bracket.
- Higher earners face immediate choices as employers haven't updated plans, and some without Roth options can't make catch-up contributions, despite potential long-term benefits, Amy Arnott says.
- Long term, continued catch-up saving could yield $120,000 total contributions over 15 years and about $200,000 by age 65 assuming 5% annual return in a workplace Roth 401.
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The Morning Sun+13 Reposted by 13 other sources
Should higher earners still make 401(k) catch‑up contributions?
Amy Arnott of Morningstar 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. Related Articles Oil prices soar amid worries of sustained war in Iran …
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Total News Sources14
Leaning Left1Leaning Right1Center9Last UpdatedBias Distribution82% Center
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- 82% of the sources are Center
82% Center
C 82%
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