Bonus Contributions Are Changing: What Anyone 50+ Needs to Know for 2026

Bonus Contributions Are Changing: What Anyone 50+ Needs to Know for 2026

There’s a big retirement planning change coming — and most people don’t even know it’s about to hit.

As part of the Secure 2.0 Act, beginning in 2026, higher-earning employees may no longer place bonus catch-up contributions into a traditional tax-deferred retirement account.

Translation: if you’re 50 or older… and you earn over $145,000… your bonus catch-up contributions will be taxed differently.

Let’s break this down simply.

What Are Catch-Up Contributions?

Most retirement plans allow you to contribute extra money once you hit age 50. This is meant to help you “catch up” as retirement gets closer.

For 2025, the catch-up contribution amount for a 401(k) is $7,500.

What’s Changing in 2026?

Beginning January 1, 2026 — if you earn $145,000 or more — you will only be allowed to put your catch-up contributions into a Roth 401(k).

This means you must pay income tax on those contributions upfront.

The upside:

Your Roth catch-up contributions (and ALL future earnings on them) will be tax-free when you withdraw them in retirement.

The downside:

If your employer does not offer a Roth 401(k)… you will no longer be eligible to make catch-up contributions at all.

Also — remember — this change actually was supposed to start in 2024 but was delayed to give plan administrators time to make system changes. Now it goes into effect 2026.

What You Should Do Now

1. Determine if this change impacts you
   (Are you 50+ AND earning $145K+? If yes… this is you.)

2. Check whether your employer offers a Roth 401(k)
   If not, you need to plan NOW because you’ll lose the ability to contribute catch-up.

3. Adjust strategy ahead of time
   Decide whether you’ll pay tax upfront and move those contributions to Roth… OR adjust your future plan contributions to avoid the tax hit completely.

Bottom Line

If you’re in the higher-earning category and approaching retirement age, this rule can affect your tax planning massively. Don’t wait until 2026 — get ahead of this now so you’re not caught scrambling later.

This is a good time to talk to a tax pro and a financial planner and make sure your retirement strategy still aligns with the new law (and with where you want your retirement lifestyle to land).