The SECURE Act 2.0 introduced a wide range of changes designed to strengthen Americans’ retirement readiness, but one of the most talked-about provisions affects catch-up contributions for higher-earning workers. Beginning in 2026, individuals age 50 and older who earned more than $150,000 at their employer last year will be required to make their catch-up contributions to employer retirement plans on a Roth basis rather than pre-tax. At first glance, this change may feel like a disadvantage, particularly for those accustomed to using pre-tax contributions to reduce current taxable income. However, when viewed through a long-term planning lens, forced Roth catch-up contributions can actually create meaningful benefits and improve retirement flexibility.
Historically, catch-up contributions have been a valuable tool for individuals nearing retirement who want to accelerate savings during their highest earning years. The ability to contribute additional dollars on a pre-tax basis helped reduce current tax liability while boosting retirement balances. SECURE Act 2.0 does not eliminate catch-up contributions, but it does change how they must be treated for certain high earners. For those required to use Roth catch-ups, contributions are made with after-tax dollars, but the tradeoff is tax-free growth and tax-free withdrawals in retirement if requirements are met. This shift represents a subtle but powerful rebalancing of future tax exposure.
Tax Benefits in Retirement
Tax-free growth is another meaningful benefit of Roth catch-up contributions. While paying taxes on contributions may feel painful in the short term, the long-term compounding of tax-free earnings can significantly enhance after-tax wealth. For individuals making catch-up contributions later in their careers, even a decade of tax-free growth can make a substantial difference. This is especially true for investors who do not need to tap retirement accounts immediately and can allow Roth assets to continue compounding into their 70s or beyond.
Roth accounts also play an important role in managing required minimum distributions (RMDs). Traditional retirement accounts are subject to RMDs, which can force withdrawals regardless of cash-flow needs and increase taxable income later in retirement. Roth IRAs, however, are not subject to RMDs during the original owner’s lifetime. While Roth 401(k)s used to have RMDs, SECURE Act 2.0 eliminated those beginning in 2024, aligning them more closely with Roth IRAs. Forced Roth catch-up contributions can therefore help reduce future RMD pressure and provide greater flexibility in retirement income planning.
See the chart below for an example. By contributing $8,000 annually into a Roth between ages 50–65, you could build roughly $186,000 in Roth assets (assuming 6% returns), which won’t be included in your taxable income in retirement. If that amount had instead been in a traditional tax-deferred account, your RMD at age 75 on that sum could be about $13,555.68 in taxable income that you would have to take — and pay tax on — in one year based on IRS life expectancy tables (about 4.07% at age 75).
| Age | Cumulative Contributions | Roth Balance at 6% Return | RMD if Pre-Tax Instead |
|---|---|---|---|
| 50 | $0 | $0 | |
| 55 | $40,000 | $45,096.74 | |
| 60 | $80,000 | $105,446.36 | |
| 65 | $120,000 | $186,207.76 | |
| 70 | $120,000 | $249,187.99 | |
| 75 | $120,000 | $222,469.74 | $13,555.68 |
This change may also be particularly beneficial for individuals who expect to remain in higher tax brackets during retirement. Professionals, business owners, and executives often assume their tax rate will drop meaningfully after they stop working, but that is not always the case. Pensions, Social Security, investment income, and RMDs can combine to keep taxable income elevated. For these individuals, paying taxes earlier through Roth catch-up contributions may ultimately result in a lower lifetime tax bill, even without changes in tax law.
Tax Benefits for Future Generations
While retirement accounts are often viewed primarily as income sources, they are increasingly important components of multigenerational wealth planning. Roth assets can be particularly attractive to heirs, as distributions are generally tax-free, even though beneficiaries must still follow required distribution timelines. Under current rules, most non-spouse heirs are required to withdraw inherited retirement accounts within 10 years of the original owner’s death. When those assets are traditional, distributions taken during that 10-year window are generally taxable and can push beneficiaries into higher tax brackets during their peak earning years. In contrast, inherited Roth accounts are still subject to the 10-year rule, but withdrawals are typically tax-free. This can provide heirs with greater flexibility around timing, reduce the risk of unintended tax consequences, and preserve more of the after-tax value of the legacy you leave behind.
Continuing with the previous example, see the chart below that shows the balance and potential RMD if the Roth balance grew 6% until your passing. If you pass away at 80 with a 55 year old child, the Roth balance would save them from declaring an extra $44,000 approximately in income per year during their peak earning years before retirement.
| Age at Death | Balance with 6% Return | Per Year RMD |
|---|---|---|
| 80 | $446,257.73 | $44,625.77 |
| 85 | $597,193.51 | $59,719.35 |
| 90 | $799,179.63 | $79,917.96 |
While change can be uncomfortable, SECURE Act 2.0’s Roth catch-up provision reflects a growing recognition that tax diversification and flexibility are essential components of retirement success. Forced Roth contributions may reduce today’s tax deduction, but they also create assets that offer greater control, fewer distribution constraints, and meaningful long-term tax advantages. For many investors, this shift may ultimately strengthen retirement outcomes rather than weaken them.
As with any legislative change, the impact of Roth catch-up contributions will vary based on individual circumstances. Income level, savings horizon, retirement goals, and legacy priorities all matter. However, for those willing to look beyond the immediate tax impact, forced Roth catch-ups can be viewed not as a limitation, but as an opportunity to build more resilient, tax-efficient retirement wealth. Thoughtful planning can turn this requirement into a strategic advantage—one that supports both retirement income and long-term financial confidence.
