A major SECURE 2.0 provision is now in full effect for 2026, and it fundamentally changes how higher-earning workers over 50 can make catch-up contributions to their retirement plans. If you earned more than $150,000 in FICA wages in 2025, your catch-up contributions must now be made on a Roth (after-tax) basis.
Here's what this change means for your retirement savings strategy.
The New Roth Catch-Up Requirement
Beginning January 1, 2026, the IRS requires that workers age 50 and older who earned more than $150,000 in the prior year must make all catch-up contributions to their 401(k), 403(b), or governmental 457(b) plans on a Roth basis. This means you'll pay taxes on these contributions now rather than deferring them until retirement.
The $150,000 threshold is based on your FICA wages from your employer in the previous calendar year. For 2026 contributions, this means your 2025 W-2 wages determine whether you're subject to the rule.
2026 Contribution Limits
Understanding the current limits helps put this change in context:
- Standard 401(k) contribution limit: $24,500
- Catch-up contribution (age 50+): $8,000
- Super catch-up (ages 60-63): $11,250
- Maximum total for workers 50-59 or 64+: $32,500
- Maximum total for workers 60-63: $35,750
For high earners affected by this rule, the catch-up portion—$8,000 or $11,250 depending on age—must go into the Roth side of your plan.
Who Is Exempt From This Rule
Not everyone earning a high income is subject to the Roth catch-up requirement:
Those earning $150,000 or less in FICA wages can continue making pre-tax or Roth catch-up contributions as they choose.
Partners and self-employed individuals with only self-employment income (no FICA wages from the employer sponsoring the plan) are not subject to the Roth-only rule and can make catch-ups on either a pre-tax or Roth basis.
IRA contributors are unaffected. This rule only applies to employer-sponsored plans, not traditional or Roth IRAs.
The Silver Lining: Roth Benefits
While paying taxes upfront may feel like a disadvantage, Roth contributions offer significant long-term benefits:
Tax-free growth: All investment gains in your Roth account grow tax-free and remain tax-free when withdrawn in retirement.
No RMDs: Unlike traditional 401(k) accounts, Roth 401(k) accounts are no longer subject to Required Minimum Distributions during your lifetime, thanks to SECURE 2.0.
Tax diversification: Having both pre-tax and Roth funds gives you flexibility to manage your tax bracket in retirement.
Protection against higher future tax rates: If tax rates increase, having Roth funds already taxed at today's rates could prove valuable.
What If Your Plan Doesn't Offer Roth?
Here's a critical consideration: employers are not required to offer Roth contributions. However, plans that don't offer a Roth option will be prohibited from accepting any catch-up contributions from high earners affected by this rule.
If your plan doesn't currently have a Roth feature, you should contact your HR department. Many employers are adding Roth options to comply with SECURE 2.0, but some may not have completed this transition.
Action Steps for 2026
Review your 2025 W-2: Confirm whether your FICA wages exceeded $150,000 to determine if you're affected.
Check your plan's Roth option: Ensure your employer's plan offers Roth contributions and that you're properly enrolled.
Update your contribution elections: If you were making pre-tax catch-up contributions and now must switch to Roth, adjust your payroll elections accordingly.
Plan for the tax impact: Roth contributions will increase your current-year tax bill. Factor this into your tax planning and ensure you have sufficient withholding.
The Bottom Line
The mandatory Roth catch-up rule represents a significant shift in retirement planning for higher earners. While the immediate tax impact may sting, the long-term benefits of tax-free growth and withdrawal flexibility could outweigh the upfront cost. Consult with your financial advisor or tax professional to understand how this change fits into your overall retirement strategy.
Sources: IRS, Charles Schwab, Fidelity, The CPA Journal, John Hancock Retirement