Major Changes Coming to Retirement Catch-Up Contributions in 2027!
Starting in 2027, high earners aged 50+ will face new rules for catch-up contributions to their 401(k), 403(b), and governmental 457(b) plans.
What's Changing:
If you had Social Security wages over $145,000 (indexed for inflation) in the prior year, your catch-up contributions MUST be made as Roth (after-tax) contributions—no more pre-tax catch-up deferrals.
The Good News:
*Catch-ups ages 60-63 increase to $11,250 (vs. $7,500 for others)
*Plans can auto-convert your contributions to Roth
*Multiple correction methods if mistakes occur
*Multiemployer plans get extra time to comply
Key Details:
*Based on Box 3 (Social Security wages) from your W-2
*Applies per employer (wages aren't aggregated across employers)
*State/local government workers without FICA wages are exempt
*Your regular contributions can still be pre-tax
Why the Change: Congress wanted higher earners to pay taxes upfront rather than deferring them, generating revenue while still encouraging retirement savings.
Action Items:
Review your 2026 wages
Discuss Roth vs. pre-tax strategy with your advisor
Ensure your plan sponsor is prepared for 2027
