The SECURE 2.0 Act and the Roth Catch-Up Contribution Requirement
A Retirement Planning Pivot
By Jennifer Osgood, President, Wagner Wealth Management
Previously published in Stroll Magazine April 2026
The SECURE 2.0 Act, passed in late 2022 as a major package of retirement-savings reforms, introduced a meaningful shift in how certain older, higher-paid employees make catch-up contributions to employer-sponsored retirement plans. Beginning in 2026, if a retirement plan participant is age 50 or older and has earned above an indexed wage threshold in the prior year, all catch-up contributions must be made to a Roth account (after tax) rather than a traditional pre-tax account. This change reshapes the traditional tax dynamics of retirement saving and has important implications for those approaching retirement.
What the New Roth Catch-Up Rule Requires
Under the revised rules in SECURE 2.0’s Section 603, participants in qualified plans such as 401(k), 403(b), and governmental 457(b) plans who are age 50 or older and earned more than a set amount in the prior year (generally around $145,000–$150,000 in FICA wages, indexed annually) must make all catch-up contributions as designated Roth contributions.
Traditionally, catch-up contributions—additional deferrals allowed once you reach age 50—have been made on a pre-tax basis, reducing taxable income in the year of contribution. Under SECURE 2.0, however, if your prior-year wages exceed the threshold, any contributions above the standard elective deferral limit must be made on an after-tax Roth basis.
This shift fundamentally changes the timing of taxation for high-income savers.
Why the Roth Requirement Matters
For high earners who have historically relied on pre-tax catch-up contributions to reduce current taxable income, this new requirement eliminates that immediate tax benefit. Instead, the advantage shifts to the future, with tax-free growth and tax-free distributions in retirement.
For many retirees—particularly those who expect to be in a higher tax bracket later in life—this can be a valuable long-term strategy. However, the trade-off is not ideal for everyone. Some individuals may prefer the immediate tax savings, especially if they anticipate being in a lower tax bracket during retirement.
Balancing these considerations requires thoughtful planning and coordination with a trusted wealth advisor.
Broader Implications for Long-Term Planning
Tax Diversification: Requiring Roth catch-up contributions can help increase tax diversification within a retirement portfolio. By building both pre-tax and Roth assets, investors gain flexibility in managing taxable income in retirement and hedging against future tax uncertainty.
Legacy Planning: Roth accounts can be particularly effective for estate planning. Because they generally allow beneficiaries to receive distributions income tax-free, they may provide additional long-term value compared to traditional pre-tax accounts.
Behavioral Considerations: While some savers may initially be discouraged by the loss of an upfront tax deduction, this change also creates an opportunity to accelerate tax-free growth. For high-income individuals who can absorb the current tax impact, this may strengthen long-term retirement security.
Planning with SECURE 2.0 in Mind
The Roth catch-up requirement for certain higher-paid employees represents a significant evolution in retirement tax policy. Although it reduces immediate tax deductions, it also creates new opportunities for tax-free income in retirement.
High-income savers should view this shift as an opportunity to revisit their overall financial strategy. Conversations around tax optimization, cash flow planning, and retirement income strategies are more important than ever in this evolving landscape.
Working with a qualified wealth advisor can help ensure that both the costs and benefits of this new rule are fully understood and incorporated into a comprehensive financial plan.
Have a wealth planning topic you would like to learn more about? Email us at wagner@wwmadvisors.com, and you may see your question addressed in a future article.
Wagner Wealth Management has offices in Greenville, Anderson, and Oconee counties. Call 864-236-4706 or visit www.wagnerwealthmanagement.com to learn more.
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