What Do the New Roth Catch-Up Rules Mean for High-Income Retirement Savers?

A new era of retirement planning begins with SECURE 2.0 Act final regulations

With the IRS’s final regulations under the SECURE 2.0 Act, specifically around Roth catch-up contributions, there is a new opportunity to rethink how your retirement strategy aligns with your tax position and long-term wealth goals.

Released on September 15, 2025, these regulations introduce key changes to how catch-up contributions are handled for retirement plan participants aged 50 and older, particularly those with higher incomes. An overview of the changes and planning insights are detailed below.

Overview of the catch-up contribution changes

The SECURE 2.0 Act originally passed in 2022 included a provision requiring that catch-up contributions for high-income individuals be treated as Roth (after-tax) contributions. The new final regulations clarify how that rule will be applied:

• Who is affected? If you earned more than $145,000 in wages from your employer in the prior year, your catch-up contributions, starting in 2027, must be designated as Roth.
• What does this mean? Instead of receiving a tax deduction now (as with traditional 401(k) contributions), you will pay taxes up front. However, your future withdrawals will be tax-free, potentially offering significant long-term advantages.
• What is new in the final regulations? The IRS now allows employers to aggregate wages from certain employers to determine eligibility and provides guidance on error corrections.

Strategic opportunity

For high-net-worth individuals, this regulatory shift presents a strategic window. Three key opportunities include:

1. Tax Diversification

Roth accounts offer tax-free growth and withdrawals, an attractive hedge if you anticipate higher tax rates in retirement. This change forces a reassessment: How balanced is your current mix of pre-tax and post-tax retirement assets?

2. Estate Planning Benefits

Unlike traditional accounts, Roth IRAs have no required minimum distributions (RMDs) during the original owner’s lifetime, making them a powerful tool for intergenerational wealth transfer.

3. Enhanced Contribution Limits for Ages 60–63

For those aged 60 to 63, the SECURE 2.0 Act allows for higher catch-up contributions starting in 2025. This enables you to allocate more into Roth accounts during peak earning years, just as your retirement vision begins to solidify.

When do these rules take effect?

The mandatory Roth catch-up rule begins for taxable years after December 31, 2026. However, plan sponsors can voluntarily adopt the rules sooner under a “good faith” interpretation.

While there’s a transition period until the end of 2025, proactive planning now ensures more flexibility and control with your retirement strategy.

How Keiter can help

At Keiter, we do more than respond to changes…we help you leverage them. For questions specific to your situation, contact your Keiter Opportunity Advisor. | Email or call: 804.747.0000

Source: Treasury, IRS issue final regulations on new Roth catch-up rule, other SECURE 2.0 Act provisions | IRS.gov