3 to 4 minutes
In 2026, an important change will be made to retirement plans that can affect how older workers save for retirement. This change, a provision of the SECURE 2.0 Act, impacts how high-income earners ages 50 and older will be able to make catch-up contributions.
Keep reading to learn more.
What’s changing?
If you earned more than $145,000 in FICA wages in the previous calendar year, any catch-up contributions you make to your retirement plan must be in Roth after-tax money. To find out if you earned enough to meet this requirement, check the Social Security wages in box 3 of your W-2. The $145,000 amount will be indexed for inflation after this change takes effect, so it’s likely to increase in future years.
What’s the impact on how I save?
The IRS sets a regular contribution limit for retirement plans every year regardless of age. That regular limit is $23,500 in 2025, and it applies to any pre-tax and/or Roth contributions you make. Then, if your plan offers catch-up contributions, there’s the catch-up limit of an additional $7,500 that applies if you’re age 50 or older. Note: In 2025, if you're ages 60 to 63 on the last day of the calendar year and your plan allows, you may be able to save an additional $3,750 in catch-up contributions.
The regular contribution limit is unaffected by the change described above—you can still save up to that limit on a pre-tax basis and/or a Roth basis (if your plan offers it). Then if you want to make catch-up contributions, you can save more, but only with Roth. Check out our retirement plan contributions limits page for the latest figures.
If you’re a high-income earner and plan to make catch-up contributions to your plan, make sure you understand how the new rule might affect you.
A note about contributions
Most retirement plans at Vanguard offer these 2 types of contributions:
- Pre-tax contributions are deducted from your pay before federal taxes are withheld. This means that the amount of taxes taken out of your paycheck goes down when you contribute.
- Roth contributions are made with after-tax money, so you don’t get a tax break as you make them to your retirement plan. But withdrawals of both contributions and any earnings are tax-free if you meet certain conditions—you must be age 59½ or older when you withdraw the Roth earnings, and you must have made your first Roth contribution at least five years before withdrawing your Roth earnings.
Frequently asked questions
Q. How can I find what my FICA wages were for the previous calendar year?
A. Check your Social Security wages in box 3 of your W-2.
Q. Does the new rule affect catch-up contributions to IRAs?
A. No. IRAs are not affected. The regular contribution limit in 2025 is $7,000, with an additional catch-up limit of $1,000.
Q. I recently changed employers. Could that affect my status?
A. It might. Only compensation from the employer sponsoring your current plan counts toward the earnings limit. Check your FICA wages with your current employer in the previous calendar year to find out.
Q. What happens if my plan doesn’t offer Roth contributions, and I'm required to make catch-up contributions as Roth?
A. If your retirement plan doesn’t offer Roth contributions, you won’t be able to make catch-up contributions to the plan. You may be able to save more for retirement by contributing to an IRA, if you’d like.
Q. Where can I learn more about catch-up contributions?
A. You can start with this article on catch-up contributions.
Q. When does the new rule start?
A. It becomes effective in 2026.
Whenever you invest, there’s a chance you could lose the money.
Taxes: Taking money from your retirement account can affect how much you’ll have to pay in taxes. You’ll owe taxes on pre-tax money. You won’t owe taxes on Roth earnings as long as you are age 59½ or older and it’s been at least five years since your first Roth contribution. If required by law, Vanguard will withhold some taxes for you. You may need to pay a 10% federal penalty tax if you take money out early.
