Just when you think you’ve got your retirement savings on autopilot, wham, a new tax bill comes along to change your plans.
Today, I’m focusing on the changes in catch-up contributions to employer retirement plans brought on by OBBRA (the 2025 tax bill). The following does not apply to Individual Retirement Accounts (Traditional, SEP, Roth, or SIMPLE).
First, a quick reminder of the basics. Savers UNDER 50 years of age can contribute up to $24,500 in 2026 401(k)s, 403(b)s, 457s, 401(a)s, and TSPs. If you turn 50 in 2026, you can put an additional $8,000 into those accounts.
OBBRA mainly changes how certain higher earners make catch‑up contributions, not whether they can make them. And adds a new Super Catch-up amount to workers aged 60-63
Here is what you should know, with a second to-do bullet under each change.
- If your 2025 wages were above $145,000 (this will be inflation adjusted going forward), you must make the catch-up contributions as a Roth election.
- To-do: Make sure your contribution election reflects the catch up amount going to Roth. Employers and plan providers may need to be catching up themselves to update their technology to accommodate this new wrinkle.
- Plans can still allow pre‑tax catch‑up contributions for participants under the wage threshold; OBBRA does not eliminate pre‑tax catch‑ups entirely, it just restricts that option for higher earners.
- To-do: Every year, it’s a good idea to make sure you are maximizing your retirement contribution amounts in line with the latest limits.
- If your employer doesn’t offer a Roth contribution option, higher earners cannot make a catch-up contribution. This will be a strong reason for the laggard employers not offering Roth contributions to update their plan design.
- To-do: Gather your pitchforks, shovels, and high earning friends to create a mob scene at your Head of HRs office if you don’t currently have a Roth contribution option in your plan. Just kidding, maybe a well-worded email will do.
- Special catch‑up features that are not “age‑based” (for example, the 15‑year service catch‑up in 403(b) plans or the 3‑years‑before‑retirement catch‑up in governmental 457(b) plans) are generally not subject to the Roth‑only rule, even for high earners.
- To-do: This is more of an FYI, but ditto to Bullet 2: These catch up contributions are a little weird and a lot of people don’t take advantage of them. Make sure that you are using your catch up contributions to your fullest advantage each year.
Sure, this isn’t great for your current taxes. But it’s not so terrible to build some Roth money for tax diversification in retirement.
I always say that Roth money is like life insurance death benefits: No one ever says there is too much of it, even if how you got it was painful.
