A significant change to retirement savings rules took effect on January 1, 2026, and it directly impacts older workers with higher incomes. Under provisions from the SECURE 2.0 Act, employees age 50 and older who earned more than $150,000 in FICA wages from their employer during the prior year must now make all catch-up contributions on a Roth (after-tax) basis.
Previously, workers could choose whether to make catch-up contributions on a pre-tax or Roth basis. That choice no longer exists for those above the income threshold.
Who Is Affected
The mandatory Roth catch-up rule applies to participants in 401(k), 403(b), and governmental 457(b) plans who meet both criteria: they are age 50 or older, and they earned more than $150,000 in FICA wages from their current employer in 2025.
The $150,000 test looks only at wages from your current employer. Wages from other employers are not combined when determining whether you exceed the threshold.
For 2026, the standard contribution limit is $24,500. Workers age 50 and older can contribute an additional $8,000 in catch-up contributions, bringing their maximum to $32,500. Those aged 60 to 63 can take advantage of the "super catch-up" provision with an $11,250 catch-up limit, for a total of $35,750.
How the Rule Works
If you're a high earner age 50 or older, you can still choose to make pre-tax or Roth contributions for your base $24,500. However, any catch-up contributions beyond that amount must go into a Roth account.
This creates a potential problem: if your employer's plan doesn't offer a Roth option, you cannot make catch-up contributions at all. According to guidance from the IRS, plans without Roth features must either add them or their high-earning participants will lose access to catch-up contributions entirely.
The Tax Trade-Off
While required Roth contributions mean you won't get an immediate tax deduction, there are potential long-term benefits. Roth contributions grow tax-free, and qualified withdrawals in retirement are also tax-free. For those who expect to be in a similar or higher tax bracket in retirement, Roth contributions can provide significant tax savings over time.
Additionally, Roth 401(k) accounts are no longer subject to required minimum distributions during the owner's lifetime, thanks to another SECURE 2.0 provision. This makes Roth accounts more valuable for those who may not need to tap their retirement savings immediately.
What You Should Do Now
Check your plan. Confirm that your employer's retirement plan offers a Roth contribution option. If it doesn't, speak with your HR department about adding this feature.
Review your 2025 earnings. Determine whether your FICA wages exceeded $150,000 from your current employer. If so, the mandatory Roth catch-up rule applies to you.
Adjust your contribution elections. If you've been making pre-tax catch-up contributions, update your elections to designate catch-up amounts as Roth. Your plan administrator should be able to help with this process.
Consider your overall tax strategy. While losing the immediate tax deduction may feel like a setback, tax-free growth and withdrawals can be valuable, especially if you have a long time horizon or expect taxes to rise.
Looking Ahead
The IRS final regulations on this rule technically apply starting in 2027, but plans must operate in good faith compliance beginning in 2026. This means the requirement is effectively in place now.
For retirement savers affected by this change, the key is to adapt your contribution strategy rather than reduce your savings rate. The tax-free growth potential of Roth accounts can help offset the loss of immediate tax benefits, and maximizing your contributions remains one of the most effective ways to build retirement wealth.
Sources: Internal Revenue Service, Charles Schwab, Quarles Law Firm, Employee Fiduciary, CAPTRUST