Encouraging Catch-up Contributions Among Older Workers

For many employees approaching retirement, the catch-up contribution rules offer one of the most powerful ways to accelerate savings. With updated IRS contribution limits for 2026—and new provisions taking effect under the SECURE 2.0 Act—plan sponsors have an opportunity to help older workers meaningfully strengthen their long-term financial security.

This article summarizes the updated limits and outlines strategies plan sponsors can use to encourage employee adoption, along with how a retirement plan advisor can help.

Contribution Limits for 2026

The IRS has recently announced new cost-of-living adjustments for 2026. Here are the key limits plan sponsors should be communicating throughout the year:

• Elective deferral limit: $24,500
• Standard catch-up (age 50+): $8,000
• Super catch-up (age 60–63): $11,250 (indexed separately)
• Maximum potential deferral for age 50+: $32,500
• Maximum potential deferral for age 60–63: $35,750

These higher 2026 limits give older workers a powerful opportunity to boost retirement savings during their peak earning years.

The 2026 Roth Catch-Up Requirement for High-Income Employees

It’s also important to note that beginning January 1, 2026, employees who:

• are age 50 or older,
• are eligible to make catch-up contributions, and
• earned $150,000 or more in FICA wages in the prior calendar year

will be required to make all catch-up contributions on a Roth (after-tax) basis. This Roth-only rule applies to 401(k), 403(b), and governmental 457(b) plans.

Key implications for plan sponsors:

• If your plan does not offer a Roth feature, affected participants will not be allowed to make any catch-up contributions in 2026.
• Payroll systems must be able to identify employees crossing the $150,000 prior-year wage threshold and correctly route catch-up contributions to Roth.
• Participants accustomed to pre-tax catch-up contributions may see lower take-home pay, so advance communication is essential.
• For employees under the $150,000 threshold, catch-up contributions may still be pre-tax or Roth (participant choice).

This rule is separate from the SECURE 2.0 super catch-up; high-income 60- to 63-year-olds will be subject to both higher limits and Roth-only treatment.

Why Catch-Up Contributions Matter

Plan sponsors have strong reasons to focus on catch-up engagement among older workers:

• Shorter time horizon: Participants nearing retirement often have fewer years remaining to grow their savings.
• Higher earnings: Many older workers have more disposable income to save.
• Improved retirement readiness: Maximizing catch-up deferrals can meaningfully improve outcomes.
• Workforce planning: Retirement-ready employees reduce long-term HR and benefits pressures.

Catch-ups—and especially the super catch-up—can close significant savings gaps quickly.

Five Strategies to Encourage Catch-up Adoption

1. Use targeted, segmented communication rather than broad messaging.

   Older workers respond best when messaging is tailored to their circumstances. Segment outreach by age and income. Participants ages 50–59 need guidance focused on the standard catch-up, while those 60–63 should receive communications explaining the super catch-up and how it boosts their total contribution potential. High-income participants must also understand the 2026 Roth-only requirement so they can anticipate the tax impact. Personalized and specific communication builds clarity and increases adoption.

2. Simplify the election process and make taking action seamless.

   Many participants don’t realize that catch-up contributions often require a separate payroll election or an increase in deferral percentage. Plan sponsors should work closely with payroll and recordkeepers to ensure that online portals clearly separate regular deferrals, standard catch-ups, and super catch-ups. Providing step-by-step instructions, screenshots, or short video guides removes friction and makes it far more likely that participants will follow through.

3. Provide focused education on Roth versus pre-tax contributions—especially before the 2026 rule change.

   With the Roth-only mandate approaching for high earners, education is critical. Older workers must understand the long-term benefits of Roth contributions: tax-free growth, tax-free qualified withdrawals, and potential reductions in future RMDs. Use comparison tools, workshops, and advisor-led sessions to explain why Roth catch-ups can be advantageous—and why the rule may affect take-home pay for certain participants.

4. Adopt a structured communication timeline throughout the year.

   One communication per year isn’t enough. Start messaging in late 2025 to prepare employees for the 2026 limit increases and Roth requirements. Reinforce the message in early 2026 when employees are adjusting elections. Follow up mid-year, especially with ages 60–63, who may forget they qualify for the super catch-up. A consistent communication cadence keeps catch-up opportunities visible and encourages timely action.

5. Track participation data and conduct follow-up outreach based on insights.

   Sponsors should monitor how many age-50+ workers make catch-up contributions, how many age 60–63 employees are using the super catch-up, and which high earners have updated their Roth elections. This allows targeted follow-up with employees who are eligible but not yet participating. Over time, benchmarking catch-up usage year-over-year helps evaluate whether communication and plan design strategies are effective.

How a Retirement Plan Advisor Can Help

A knowledgeable retirement plan advisor can strengthen every part of the catch-up engagement strategy. Advisors help review plan design to ensure the super catch-up is available and the plan supports the 2026 Roth-only rule. They coordinate with recordkeepers and payroll providers to validate operational readiness, create targeted participant education campaigns, run workshops, and develop modeling tools that show the impact of catch-ups over time. They also assist with benchmarking and compliance oversight, ensuring plan sponsors have a structured, effective approach.

Final Thoughts

Catch-up contributions—standard, super, and Roth—give older workers powerful tools to accelerate retirement readiness. By taking a structured, proactive approach to communication, education, and administration, plan sponsors can help employees take full advantage of the expanded opportunities coming in 2026. With support from your retirement plan advisor and early planning, your organization can improve participant outcomes and keep older workers on track for a stronger financial future.