"Starting this year, SECURE 2.0 Section 603 requires high earners to route their catch-up contributions into a Roth bucket. If your prior-year FICA wages with your current employer topped $145,000, your catch-up portion in 2026 must go in after tax."
"For a 60-year-old, the catch-up is unusually generous. The 2026 base deferral is $24,500. Workers aged 60 through 63 get a super catch-up of $11,250 on top, for a total deferral capacity of $35,750."
"If she funnels the maximum into the Roth 401(k) every year from 60 through 65, the principal she deposits looks like this: $35,750 a year for four years, then $32,500 a year for two more, totaling $208,000 of after-tax money inside the plan."
"Compounded year by year at a 7% assumption from each contribution date through age 80, that pile grows to roughly $685,000 of permanently tax-free retirement money."
Starting in 2026, SECURE 2.0 Section 603 mandates that high earners must allocate catch-up contributions to Roth accounts. For a 60-year-old engineer with a $1.4 million 401(k), this means redirecting $11,250 annually into a Roth for four years. If she maximizes her contributions, she could deposit $208,000 in after-tax money, potentially growing to $685,000 by age 80. This shift emphasizes the importance of strategic planning for retirement savings, especially for those nearing retirement age.
Read at 24/7 Wall St.
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