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The IRS and U.S. Department of the Treasury this week finalized rules for certain provisions from the Secure 2.0 Act<\/a> of 2022, including catch-up contributions<\/a> for 401(k) and other plans, which apply to workers age 50 and older.<\/p>\n Starting in 2027, catch-up contributions<\/a> generally must be after tax (also called Roth), rather than pretax, for workers who made more than $145,000 from their current employer during the previous year. But some plans could make the change in 2026 “using a reasonable, good faith interpretation of statutory provisions,” the IRS said.<\/p>\n In the meantime, those investors can pick between pretax and Roth retirement catch-up contributions, assuming their workplace plans have both choices and their cash flow permits, experts say.<\/p>\n More from Financial Advisor Playbook:<\/p>\n Here’s a look at other stories affecting the financial advisor business.<\/p>\n Lawmakers added the Roth catch-up contribution provision to Secure 2.0 as a “pay-for” to help fund the legislation.<\/p>\n Roth contributions are after-tax deposits, but the funds grow tax-free. By comparison, pretax contributions reduce your adjusted gross income upfront, but you owe regular income taxes when you withdraw the funds.<\/p>\n Of course, you need to consider your full financial picture when making Roth contributions since a higher AGI can impact eligibility for other deductions.<\/p>\n “Now is the time to work with your advisor or tax preparer to run multi-year tax projections,” said CFP Patrick Huey, owner of Victory Independent Planning in Portland, Oregon.\u00a0<\/p>\n This could help you decide whether to “accelerate” pretax catch-up contributions through 2026 or “embrace the transition to Roth” sooner, he said.<\/p>\n ‘Do not sit on the sidelines’<\/p>\n For 2025, workers can\u00a0defer up to $23,500<\/a>\u00a0into 401(k)s, and investors age 50 and older can make an extra $7,500 in\u00a0catch-up contributions<\/a>. There is also a “super catch-up” contribution<\/a> for workers aged 60 to 63, which raises the catch-up limit to $11,250.<\/p>\n In 2024, nearly all retirement plans offered catch-up contributions, but\u00a0only 16% of eligible workers<\/a>\u00a0made these deferrals, according to a 2025 Vanguard report based on more than 1,400 plans and nearly 5 million participants.<\/p>\n Most catch-up contribution participants earned $150,000 or more, the report found.<\/p>\n