Only about 15% of workers eligible for catch-up contributions actually take advantage of them, even though they can supercharge retirement savings¹. If you’re a firefighter over 50, those extra catch-up contributions let you stash more in your 457(b) or 401(k) each year. And if you’re in your early 60s, Congress even decided to boost your catch-up limit by 50% starting in 2025. But here’s the curveball: a recent law (SECURE 2.0) said high earners would lose the tax break on these catch-ups and have to contribute them after-tax (Roth), originally beginning 2024. Should you be worried?
Good news – the IRS hit the brakes and delayed that Roth-only rule until 2026². This gives firefighters a bit more breathing room to plan. Let’s break down what’s changing, why it matters, and how you can bridge the gap until the new rules kick in.
What Changed: SECURE 2.0 and Roth Catch-Up Contributions
Congress passed the SECURE 2.0 Act in late 2022, bringing a slew of tweaks to retirement rules. Two big changes target folks around age 60+:
“Super” Catch-Up Limits (2025)
If you’re age 60–63, you get to contribute extra to your retirement plan starting in 2025. The normal catch-up for 50+ is $7,500, but ages 60–63 can put in 150% of that – roughly $11,250 instead³. That means a firefighter in that age range could potentially sock away a total of about $34,750 in a 401(k)/457 plan for 2025 (the regular limit $23,500 + catch-up $11,250). It’s Congress’s way of letting those nearing retirement “catch up” even more aggressively on their savings.
Mandatory Roth Catch-Ups for High Earners
SECURE 2.0 also included a provision that anyone earning over $145,000 (wages from your employer, indexed for inflation) will no longer be allowed to put catch-up contributions in pre-tax accounts starting in 2026². Instead, those extra contributions must go into a Roth account – meaning you pay taxes on that money now, and it grows tax-free for retirement. In other words, no upfront tax deduction on catch-up dollars if you’re a higher-income earner. For firefighters, this typically affects those in senior ranks or high overtime earners making above the threshold. If you make less than ~$145k a year, you’re off the hook – you can continue making catch-ups pre-tax even after 2026².
Originally, this Roth requirement was set to kick in 2024, which had employers and firefighters scrambling. Many fire department retirement plans (457 or 401(k)) didn’t even have a Roth option in place yet. It was like being told your next overtime paycheck must be put into a new account you might not even have set up! Recognizing the chaos, the IRS announced a two-year delay in late 2023. The Roth-only rule for catch-ups will now start in 2026 instead². They also clarified that in the meantime, catch-up contributions are still allowed for everyone 50+ regardless of income, even if your plan doesn’t offer Roth².
So, here’s where we stand:
- 2023–2025: You can continue making catch-up contributions as tax-deferred (pre-tax) if you want, no matter your income. If you’re 60-63 in 2025, you get the higher limit and can still do it pre-tax for that year.
- 2026 onward: If you earned above the threshold ($145k prior year, adjusted), any catch-up contributions must go into a Roth account (after-tax). If your plan has no Roth option by then, high earners won’t be allowed to make catch-up contributions at all² – so it’s critical your plan adds a Roth feature by 2026.
Bottom line: A big change is on the horizon for those extra contributions, but you’ve got a grace period until 2026. Next, we’ll look at how to make the most of this delay and set yourself up for success.
Bridging Strategies Until the Roth Rule Kicks In
Having an extra two years is great, but perhaps you shouldn’t just coast and ignore the coming change. Now’s a great time to strategize. Here are some ways firefighters can adjust their saving tactics before 2026 (and beyond):
Rebalance Traditional vs. Roth Contributions
Up until 2026, you’re free to choose pre-tax or Roth for your elective deferrals and (if you’re under the income limit) for catch-ups. It’s a good time to assess your mix. If you expect to have a significant firefighter’s pension and other income in retirement, you might end up in a higher tax bracket than you assumed. Shifting some contributions to Roth now could hedge against future tax increases – giving you a pool of tax-free money later.
On the other hand, if you’re a few years from retirement and currently in a high tax bracket, you may still favor maxing pre-tax contributions while you can (to lower your taxable income today). Many pros recommend maintaining tax diversification – having both pre-tax and Roth savings – so you have flexibility in retirement⁴. For example, you could start directing your regular 457 contributions to pre-tax, but put your catch-up dollars into a Roth 457 (if your plan allows) or vice versa. The key is to find a balance that suits your situation. Use this grace period to gradually tilt your contributions if needed, rather than a sudden switch in 2026.
Maximize Your HSA (Health Savings Account)
If you have access to an HSA (typically by being in a high-deductible health plan), it’s one of the best tax-advantaged tools, especially for firefighters nearing retirement. An HSA offers a triple tax benefit – contributions are pre-tax, growth is tax-free, and withdrawals are tax-free for qualified medical expenses⁵. That’s right, it’s like a Roth and traditional combined: you get the upfront deduction and tax-free withdrawals for healthcare. How does this tie in? Well, if starting in 2026 your catch-up contributions won’t reduce your taxable income (because they’ll be Roth), you can somewhat offset that by contributing the max to an HSA to lower your taxable income.
For 2025, HSA contribution limits are $4,300 individual / $8,550 family (plus an extra $1,000 catch-up if you’re 55+)⁵. If you’re 60+ and not yet on Medicare, consider funneling as much as possible into an HSA now. Invest those HSA funds and let them grow. In retirement, you’ll likely have significant health costs – a 65-year-old couple might need around $300,000 for out-of-pocket healthcare over their lifetime⁶. Using an HSA to cover those expenses is far more efficient than pulling from a taxable pension or 457 plan.
Even if you have great retiree health benefits, HSA funds can pay for things like Medicare premiums, long-term care, or just serve as another supplemental retirement account (after 65, you can withdraw for any purpose, as non-medical expenses just get taxed like an IRA withdrawal). The HSA is an unsung hero for first responders; it’s literally designed to help with those medical costs that our brave firefighters often face after years of dangerous work.
Ensure Your Plan is Roth-Ready
This one’s important for everyone: check that your 457 or 401(k) plan offers a Roth option. If your fire department’s plan is an outlier that lacks a Roth account option, that could be a problem because, come 2026, higher earners won’t be able to do catch-ups at all without a Roth account in the plan. It’s worth talking to your plan administrator or union representatives to see if a Roth 457(b) or Roth 401(k) feature will be implemented by the deadline.
If your current plan truly can’t or won’t add Roth, an alternative is to use an IRA: you can always contribute to a Roth IRA (income permitting) or do a backdoor Roth conversion if you’re above the IRA income limits. For 2024–2025, you can put up to $7,500 per year in an IRA if you’re over 50 (including the $1k catch-up), rising to $8,000 in 2025⁴. It’s not as high as the employer plan limits, but it’s something.
Plan for Future Tax Bills
Finally, use this time to project your retirement income and tax picture. With a pension, possible Social Security (for some firefighters), and withdrawals from your deferred comp, you might find yourself in a moderate tax bracket even after you hang up the helmet. Roth contributions (or conversions) can make sense if you think your future tax rate could be equal to or higher than today’s.
On the flip side, if you plan to retire early (many firefighters do) and may have a gap before RMDs or before a second career, you could land in a lower tax bracket for a few years, an opportunity to do partial Roth conversions of your pre-tax savings at a lower tax cost. That’s beyond the scope of this article, but it’s something to discuss with a financial advisor. The main point: be mindful of how much pre-tax vs Roth money you’ll have by retirement. The delayed rule gives you time to strategically pay some taxes now or later to end up with an optimal mix.
Conclusion: Adapt and Overcome
Make sure you’re taking full advantage of catch-up contributions while they can still be pre-tax if that benefits you. Start sprinkling in Roth contributions so it’s not a shock to your budget later when the tax deduction disappears. Pile extra savings into your HSA or other vehicles to keep Uncle Sam at bay. And ensure your retirement plan infrastructure is ready for the new world (because the last thing you want is to lose out on saving opportunities due to red tape).
At Protection Red, our mission is to protect and serve those who protect and serve. We understand the unique financial challenges firefighters face – from the toll of the job on health, to navigating pensions and overtime, to new laws like SECURE 2.0 that can impact your hard-earned money. Roth-only catch-ups may be deferred for now, but your retirement won’t be – keep planning, stay flexible, and you’ll be ready to roll in 2026 and beyond. We’re here to help you every step of the way, ensuring your financial future remains as solid as the years of your service.
Sources:
- https://www.bankrate.com/retirement/top-reasons-to-make-401k-catch-up-contributions/
- https://www.schwab.com/learn/story/what-to-know-about-catch-up-contributions
- https://www.fidelity.com/learning-center/personal-finance/secure-act-2
- https://www.schwab.com/learn/story/income-too-high-roth-ira-try-these-alternatives
- https://www.fidelity.com/viewpoints/wealth-management/hsas-and-your-retirement
- https://www.morganstanley.com/articles/health-savings-account-retirement-tax-advantages
