New IRS rules allow workers aged 60-63 to contribute an extra $11,250 to 401(k) plans, but adoption remains low due to income constraints.
The IRS will permit workers aged 60 to 63 to contribute an additional $11,250 to their 401(k) plans in 2026, raising the total limit to $35,750. The change stems from the SECURE 2.0 Act’s “super catch-up” provision, marking the largest pre-tax retirement contribution increase ever offered to individuals.
However, only 16% of eligible workers currently utilize standard catch-up contributions. Median annual earnings of $65,000 for this age group mean deferring the full $35,750 would require setting aside nearly half of gross income. Average 401(k) balances for those aged 60-64 stand at $246,500, less than half the recommended savings target.
High earners making over $150,000 must now direct all catch-up contributions into Roth 401(k) accounts, eliminating the immediate tax deduction and potentially discouraging participation.