For years, 401(k) catch-up contributions have been a valuable tool for workers in their 50s and early 60s. They allowed higher earners to save more in the final stretch before retirement and reduce current taxable income at a time when earnings often peak.
That quietly changed.
Under a recent rule that is now in effect, workers who earned more than $150,000 in the prior year can no longer make pretax catch-up contributions to their 401(k). Instead, those additional contributions must go into a Roth 401(k), meaning the money is taxed upfront rather than deducted from income.
At first glance, this may not seem like a big deal. Roth accounts offer clear benefits, including tax-free withdrawals in retirement and no required minimum distributions. But for many late-career savers, the impact shows up in less obvious ways.
The key issue isn’t that Roth is “bad.” It’s that a familiar tax-management lever has disappeared.
Many high earners have long assumed their catch-up contributions would lower taxable income, help manage cash flow, and keep them below certain income thresholds. With Roth catch-ups, that reduction no longer happens. As a result, adjusted gross income may be higher than expected, which can affect tax brackets, Medicare premiums, and eligibility for certain deductions or credits.
There’s also a practical risk. Some retirement plans are automatically routing catch-up contributions to Roth accounts. Others require participants to actively consent to the change. In plans that require action, failing to respond may result in catch-up contributions being suspended altogether. This means that some workers could unintentionally save less during critical pre-retirement years.
So what should you do?
The answer isn’t to reflexively stop making catch-up contributions. For many people, continuing to save—Roth or otherwise—still makes sense. But this change makes coordination more important than ever. Catch-ups should be evaluated alongside your broader tax strategy, retirement timeline, and other savings options.
If you’re over 50 and earning near or above this threshold, it’s worth reviewing how this rule fits into your overall plan. Quiet changes like this don’t always announce themselves, but they can have meaningful consequences if left on autopilot.