High Earners Shift $8,000 Catch-Ups to HSAs as SECURE 2.0 Ends 401(k) Tax Break
Updated
Updated · 24/7 Wall St. · Jul 5
High Earners Shift $8,000 Catch-Ups to HSAs as SECURE 2.0 Ends 401(k) Tax Break
3 articles · Updated · 24/7 Wall St. · Jul 5
Summary
Workers over 50 earning more than $150,000 are losing the pretax benefit of 401(k) catch-up contributions in 2026 because SECURE 2.0 now requires those extra deposits to go into Roth accounts.
HSAs become the main remaining pretax shelter for many of those savers, with 2026 limits of $4,400 for self-only coverage and $8,750 for family plans, plus a $1,000 catch-up at age 55.
A couple in the 32% bracket funding $9,750 into an HSA can save more than $3,100 in federal tax upfront, with additional payroll-tax savings that Roth 401(k) catch-ups no longer provide.
The recommended order is to take the full employer 401(k) match, max the HSA, then return to the 401(k) because HSA money can grow tax-free and later cover Medicare premiums and other qualified medical costs.
That strategy works only with an HSA-qualified high-deductible plan, and contributions must stop six months before Medicare enrollment to avoid a 6% excess-contribution penalty on the retroactive Part A window.