Major 401(k) change starts next year. Here’s what it means for you
How the new 401(K) rules affect catch-up contributions
- New rules for “catch-up” contributions to 401(k) retirement plans will affect high earners aged 50 or older.
- Employees earning over $145,000 annually will be required to make their 401(k) catch-up contributions after paying taxes, starting in 2027.
- This change, stemming from the Secure 2.0 Act of 2022, means high earners will pay taxes on these contributions during their working years rather than in retirement.
- The Internal Revenue Service and U.S. Department of the Treasury finalized these rules last week, with some plans potentially implementing them in 2026.
- High earners without a Roth 401(k) may be unable to make any catch-up contributions, potentially losing significant deductions.