The SECURE 2.0 Act is set to bring significant updates to retirement planning—especially for high-income earners. Beginning January 1, 2026, the tax treatment of catch-up contributions to workplace retirement plans will change based on income levels. Understanding these changes now can help you make more informed decisions and avoid surprises down the road.

What’s Changing?
If you’re age 50 or older, catch-up contributions allow you to save beyond the standard retirement plan limits. However, starting in 2026, whether or not those contributions are tax-deductible will depend on your income.

For 401(k), 403(b), and Similar Employer Plans:
•    Earned $150,000 or more in 2025:
Catch-up contributions in 2026 must be made to a designated Roth account, meaning they will be made with after-tax dollars and will not be tax-deductible. This threshold is based on wages from the prior year and will be adjusted annually for inflation.
•    Earned less than $150,000 in 2025:
You can continue to make traditional pre-tax catch-up contributions, which remain tax-deductible.
Important note: If your employer does not offer a Roth 401(k) option and you are above the income threshold, you will not be able to make catch-up contributions to that plan in 2026.

What About IRAs?
For Traditional IRAs, catch-up contributions remain generally tax-deductible, but limitations may apply depending on your modified adjusted gross income (MAGI) and whether you or your spouse are covered by a retirement plan at work.
For the 2026 tax year:
•    The catch-up contribution limit is projected to be $1,100, in addition to a projected $7,500 standard contribution limit. 
•    The income phase-out ranges for deducting IRA contributions are expected to increase as well.

How to Prepare for 2026:
Here are a few steps to consider as you plan for these upcoming changes:

• Review Your 2025 Income
  If you expect to earn more than $150,000, your catch-up contributions in 2026 will be required to go into a Roth account.
• Check with Your Employer
  Confirm whether your workplace retirement plan includes a Roth option. If it doesn’t, you may need to explore other ways to maximize your retirement savings.
• Let’s Plan Ahead Together
  As always, our goal is to help you make smart, informed financial decisions that support your long-term goals. If you have questions about how these updates may affect your retirement plan, don’t hesitate to reach out to your XML wealth advisor.
• Check out additional resources: 
  The Secure Act 2.0 Guide from Fidelity Investments

Have questions about how these insights and ideas could impact your personalized wealth management strategy? Let’s talk.

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