Since 2002, retirement savers age 50 and over have had the option of making “catch-up” contributions to their 401(k) plans, which are over and above the regular limits for employee contributions to tax-deferred retirement plans. The amounts were limited to $1,000 per year when they first came out but expanded to $7,500 by 2025.

This provision was helpful for people who got off to a late start with retirement savings, as well as empty-nesters who might have more money to spare after putting kids through college. As I discussed in a previous article, maxing out retirement savings starting at age 40 and then taking full advantage of catch-up provisions starting at age 50 could make a meaningful difference in the size of a retirement nest egg.

In addition, contributions to tax-deferred retirement plans are excluded from adjusted gross income, resulting in a lower tax bill on income that would otherwise be taxed. For example, a 50-year-old employee who contributed the $23,500 maximum to her retirement plan in 2025 plus the $7,500 catch-up amount would have effectively shielded $31,000 from current-year taxes, resulting in a tax break of $7,440 for someone in the 24% tax bracket.

But starting in 2026, some retirement savers won’t be able to take advantage of these tax breaks. That’s because of a new provision from Secure 2.0 that goes into effect on Jan. 1, 2026. Individuals who earned more than $145,000 in prior-year wages from their current employer (indexed for inflation) will only be able to make catch-up contributions in a Roth 401(k), meaning the contribution amount will be subject to taxes upfront.

For a higher-earning 50-year-old who contributes 2026’s $8,000 maximum catch-up amount, the amount contributed to the Roth 401(k) doesn’t get deducted from adjusted gross income. As a result, taxes paid in the current year would be about $1,920 higher (assuming a 24% tax bracket) than they would have been if the catch-up amount had been contributed to a traditional 401(k). Paying taxes upfront makes these contributions less attractive than they were previously, especially for retirement savers who expect to be in a lower tax bracket in retirement than they were during their working years.

Why You Might Still Want to Make Catch-Up Contributions

If you’re running behind on retirement savings, you’ll probably want to contribute the extra amount, even though there’s not a current tax advantage. If you contribute the full catch-up amount (currently $8,000) starting at age 50 and continue doing so through age 65, you could make total contributions of $120,000 or more over that period. If you’re between the ages of 60 and 63, you can contribute even more as a “super catch-up” contribution of up to $11,250 per year, with contributions for higher earnings subject to the same rules as the regular catch-up contributions.

A person who is currently age 50 and maxes out on both catch-up and super catch-up contributions could therefore end up with something in the neighborhood of $200,000 (assuming a 5% annual return) in the Roth 401(k) by age 65. And because contribution limits are adjusted for inflation each year, the total would likely be higher than that.

A Roth 401(k) has a few advantages from a tax perspective. In contrast to a traditional 401(k) or IRA, there’s no tax hit when money is withdrawn to cover spending in retirement, and the account isn’t subject to required minimum distributions. As long as the distribution is “qualified” (meaning taken after age 59½ and after the account has been open for at least five years), the proceeds aren’t subject to ordinary income taxes or capital gains taxes.

Roth 401(k)s also allow for tax-free growth; annual distributions from income or capital gains aren’t subject to taxes. As a result, if you’re contemplating between saving in a taxable account versus funneling contributions to a Roth 401(k), the Roth option would be more tax-efficient.

And in contrast to a traditional IRA or 401(k), distributions from a Roth account don’t result in other income adjustments, such as the net investment income tax or the income-related monthly adjustment amount that results in surcharges for Medicare premiums.

A Roth 401(k) can also be useful for estate planning, as beneficiaries won’t owe taxes on withdrawals as long as the account has been open for at least five years.

Finally, a workplace Roth 401(k) can later be rolled into a Roth IRA, which can be useful if you’re planning to make Roth conversions after retirement.

Why You Might Want to Skip Making a Catch-Up Contribution

Although most 401(k) plans offer a Roth 401(k), not every retirement plan offers one. If you qualify as a higher earner but your employer plan doesn’t offer a Roth 401(k), you won’t be able to make a catch-up contribution.

It’s also important to note that funds contributed to a Roth 401(k) may not be eligible for matching contributions from your employer. Employers were previously required to treat matching contributions as pretax contributions, meaning that matching contributions to a Roth 401(k) weren’t allowed. Secure 2.0 loosened up these restrictions, but not all employers have updated their plans.

If you’re confident that you’ve already amassed enough retirement savings to cover your planned spending, you might also want to skip out on catch-up contributions. That’s particularly true if you were mainly maxing out catch-up contributions to take advantage of the current tax benefits.

On balance, though, I’d lean in favor of continuing to make catch-up contributions if you can, even though they no longer help reduce taxable income prior to retirement.