The IRS has updated the rules on 401(k) catch-up contributions for taxpayers age 50 and older. But recent changes for 2026 might, well, “catch” you off guard, including Roth-only for catch-ups at a certain income level.
As you approach retirement, you might consider catch-up contributions to your retirement accounts if you can. Individuals aged 50 and older can contribute extra funds to their 401(k)s, IRAs, and other retirement plans, which can significantly boost savings in the final years before retirement. Reviewing your current contribution strategy and adjusting for these increased limits can help maximize your long-term financial security.
What Has Changed for Catch-Up Contributions?
In November, the IRS announced increased limits on catch-up contributions to retirement funds due to planned cost-of-living adjustments. This includes most 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan. Catch-up limits were also increased for IRAs. Details can be found here.
While the increased catch-up limits kick in at age 50, an even higher amount is available for retirement plan participants aged 60-63. However, income phase-out ranges apply, and they vary depending on the type of retirement account.
Brand new in 2026 is something dubbed the “Roth Rule.” The SECURE 2.0 Act of 2022 required that catch-up contributions for FICA-waged employees who earn more than $150,000 in wages be made to a Roth account (meaning the money is taxed before it’s contributed). After a delay, the rule is now kicking in.
Additional Opportunities for Business Owners
Some business owners have additional tax-advantaged retirement savings options, including solo 401(k) plans, SEP IRAs, or SIMPLE IRAs. These plans often allow for higher contribution limits, also enabling owners to boost their retirement savings as they near retirement age. It’s important for business owners to evaluate plan options and consider how catch-up contributions can fit into their overall financial strategies.
Business owners who want to save much more than a regular 401(k) or IRA will allow—even into the six figures annually—may be able to do so. Ask a tax advisor about advanced employer plans such as profit-sharing plans or defined-benefit or cash-balance pension plans to shift business profits into deductible retirement contributions each year.
Taking advantage of catch-up contributions and understanding the latest regulations can significantly enhance your retirement readiness, even near the final stretch. Whether you’re an employee nearing retirement or a business owner exploring additional savings strategies, staying informed and proactive will help you make the most of your retirement years. Feel free to contact us with questions.