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Changes to 401(k) Catch-Up Contributions

High Earners Face New Limits on 401(k) Catch-Up Contributions

mm11/05/20253 min read

Originally published in The Wall Street Journal, September 24, 2025, by Ashlea Ebeling

What’s Changing

Starting in 2026, workers age 50 and older who earn more than $145,000 will no longer be able to make pretax catch-up contributions to their 401(k) plans. Instead, these contributions must be made on an after-tax basis into a Roth 401(k).

Key points:

  • The IRS finalized rules from a 2022 law mandating Roth-only catch-up contributions for high earners.
  • The income threshold is $145,000 in wages (indexed to inflation).
  • For those 60–63, the “super catch-up” of up to $11,250 will also fall under the Roth-only mandate if income exceeds the threshold.
  • Savers without a Roth 401(k) option could lose access to catch-up contributions entirely.
  • Pretax deductions will be lost—e.g., someone in the 35% bracket forfeits nearly $4,000 in tax savings on an $11,250 catch-up contribution.
  • This change could also increase taxable income, phasing out other deductions and potentially pushing some into higher tax brackets.

Why It Matters for High Earners

While the loss of upfront deductions may feel like a setback, Roth contributions bring long-term advantages:

  • Tax-free growth and withdrawals in retirement.
  • Diversification of tax exposure—balancing pretax, Roth, and taxable accounts.
  • Protection against rising future tax rates, since taxes are paid now.

Employers are rapidly adding Roth options to plans, but if yours does not, catch-up contributions may disappear until it does.

Recommendations for High-Earning Clients

To ensure you remain on track for a tax-efficient retirement:

  1. Confirm your plan offers a Roth 401(k). If not, encourage your employer to add one—most large providers already do.
  2. Review contribution strategy now. Consider gradually shifting a portion of regular 401(k) savings to Roth, not just the catch-up.
  3. Balance across account types. Maintain a mix of pretax, Roth, and taxable savings to provide flexibility in retirement withdrawals.
  4. Evaluate income thresholds. If you are close to $145,000, planning compensation and deferrals carefully could preserve pretax catch-up eligibility in certain situations.
  5. Coordinate with tax planning. Since Roth contributions increase adjusted gross income, review the potential impact on phaseouts of deductions and credits.

At Baruffi Private Wealth, we view this change not as a loss but as an opportunity to strengthen long-term retirement planning. By embracing Roth strategies, high earners can build a more resilient and tax-efficient income stream for the future.