New IRS Retirement Rules Could Shake Up Homeowners’ Nest Eggs Under SECURE 2.0 Act

It’s never been more important for retirees to understand their financial situation, especially if they're homeowners. 

From the hidden equity tax to the new senior deduction in the One Big Beautiful Bill Act, there are plenty of new rules and regulations to keep track of—and for those approaching retirement age in the next decade, there’s one new adjustment that will change the way you save for your old age. 

Upcoming retirees, particularly homeowners, should familiarize themselves with the SECURE 2.0 Act, as it will force many to pivot regarding how they'll fund their retirement plans going forward. 

SECURE 2.0 Act and its impact on retirement contributions

The SECURE 2.0 Act was signed into law on Dec. 29, 2022 and included several retirement savings-related provisions. These included benefits like allowing employers to match contributions to Roth accounts and higher catch-up contributions.

Focusing on the new stipulations concerning catch-up contributions, starting Jan. 1, 2026, individuals ages 60 and older can make an additional contribution to their retirement accounts of $11,250, according to Fidelity Bank. 

One big change in the law affects higher earners. If you make more than $145,000, any catch-up contributions you put into your retirement account now have to go into a Roth account rather than the traditional option.

The difference between a Roth account and a traditional one is when a person actually funds their account. With a traditional retirement account, your contributions are made with pretax dollars—meaning the money goes in before taxes are taken out of your paycheck. You’ll pay taxes later when you withdraw the money, and that includes any earnings your account has built up over time.

This week, the IRS released final regulations clarifying the new SECURE 2.0 Act rules, including setting the applicability date to contributions beginning after Dec. 31, 2026. 

What retired homeowners should consider given SECURE 2.0 Act changes

Starting in 2027, workers later in their careers will need to think a little more carefully about how they save for retirement, particularly if they are homeowners. 

Upcoming retirees still be able to make regular contributions—for example, up to $23,500 in 2025—using either a traditional or Roth account. But if you earn more than $145,000, the extra $7,500 catch-up contribution will have to go into a Roth. 

Since Roth contributions are made with after-tax dollars, this reduces take-home pay, albeit in the short term. That could affect how much money is available for mortgage payments, renovations, or other housing costs

Additionally, many homeowners in higher brackets prefer traditional contributions because they lower taxable income in the here and now, which helps offset expenses like property taxes or mortgage interest. Losing that option for catch-up contributions means fewer current-year tax savings, which could feel like an extra financial squeeze.

The estate planning upside 

While the short-term tax bite may sting, it’s important to remember that Roth funds grow tax-free, which can have several benefits. 

For many retirees, income from a traditional IRA or 401(k) can create a tax headache, especially when required minimum distributions (RMDs) raise their tax bracket. A Roth IRA provides the flexibility to take tax-free withdrawals in retirement when you want and in whatever amount you want. This is unlike other retirement accounts that have RMDs beginning at age 72.

For homeowners who decide to sell their property and downsize later in retirement, having Roth funds means that future withdrawals won’t push them into a higher tax bracket when combined with home sale proceeds and Social Security.

Additionally, if homeowners are thinking about passing property to children, Roth accounts can be a smart complement. Since Roth withdrawals are tax-free, heirs won’t face the same tax burden they might with traditional retirement funds, which can make managing inherited real estate simpler.