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SECURE 2.0: Changes to catch-up contributions

Congress enacted the retirement plan legislation SECURE 2.0 in December 2022 as part of the Consolidated Appropriations Act, 2023 (the Act). It includes over 90 provisions, many of which affect employer-sponsored retirement plans and IRAs. This Alert focuses on the changes to catch-up contributions.  


Catch-up contributions were first introduced in 2001 to allow individuals who are age 50 and older to make additional contributions to their retirement accounts. Before this provision was scheduled to expire in 2010, Congress made it permanent in 2006. 

Catch-up contributions can be made to employer-sponsored retirement plans, such as 401(k) plans 403(b) plans, and IRAs, including SEP IRAs and SIMPLE IRAs. Catch-up contributions can also be made to Roth 401(k) accounts and Roth IRAs.


SECURE 2.0 makes changes to all retirement accounts to which catch-up contributions can be made.

Individual retirement accounts (IRAs), SEP IRAs and SIMPLE IRAs, Roth IRAs

Prior to SECURE 2.0, the annual catch-up contribution to an IRA was limited to $1,000. Unlike other annual limits, the IRA catch-up contribution was not indexed for inflation. Beginning in 2024, SECURE 2.0 provides that the IRA catch-up limit will be indexed annually. This change also applies to Roth IRAs. The intention is that by indexing the annual IRA catch-up limit, individuals will have more savings for retirement.

Employer-sponsored retirement plans

Catch-up contributions made by employees are pre-tax unless directed to a Roth account in the employer’s retirement plan. SECURE 2.0 eliminates pre-tax catch-up contributions for employees with compensation greater than $145,000 (indexed annually) and requires catch-up contributions to an employer’s retirement plan be designated as after-tax Roth contributions. Employees with compensation less than the threshold may continue to make Roth catch-up contributions if allowed by the employer’s retirement plan.

This change is mandatory and requires that retirement plans be amended. It is effective in 2024. The objective of treating some catch-up contributions as after-tax Roth is to raise revenue to help offset the saving incentives in SECURE 2.0.

Special catch-up contributions for ages 60-63

Beginning in 2025, SECURE 2.0 creates a special catch-up limit for employees who are ages 60 to 63 and participate in their employer’s 401(k) or 403(b) plan. This special catch-up limit is the greater of $10,000, or 150% of the regular catch-up amount in effect for the taxable year and will be indexed for inflation annually. This provision is mandatory and requires a plan amendment.

Catch-up contributions repealed?

In the process of drafting conforming amendments, the Act inadvertently deleted the provisions in the Internal Revenue Code that permit catch-up contributions. As a result, catch-up contributions, either pre-tax or Roth, will not be allowed after this year. To address this error in the legislation, Congress would need to pass additional legislation to reinstate the catch-up provisions. Although it seems that Congress will act on this, the time frame is unknown.  

Learn more

To learn more about SECURE 2.0 and how these changes to catch-up contributions may affect you, please contact your Baker Tilly advisor.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

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