For workers age 50 and over, catch-up contributions have always been a simple deal: contribute extra into your 401(k), get an extra tax deduction. As of January 1, 2026, that deal is gone for higher earners. A long-delayed provision of the SECURE 2.0 Act is now in force, and anyone who earned more than $150,000 in FICA wages last year can no longer make pretax catch-up contributions. The dollars still go in—but they go in after tax, into a Roth account.
It is one of the most consequential changes to retirement saving in years, and many participants are only learning about it through their first 2026 paycheck.
The 2026 Contribution Landscape
The IRS announced the 2026 limits in Notice 2025-67. The headline numbers:
- 401(k), 403(b), and most 457 plans: elective deferral limit rises to $24,500 (from $23,500 in 2025).
- IRAs: annual contribution limit rises to $7,500 (from $7,000), with catch-up rising from $1,000 to $1,100 for those 50+.
- Standard 401(k) catch-up (age 50+): $8,000.
- "Super" catch-up (ages 60–63): up to $11,250, where the plan permits it.
- SIMPLE IRAs: elective deferral limit rises to $17,000.
A 50-year-old maxing out a 401(k) can therefore put away $32,500 in 2026. A worker between 60 and 63 with a plan that allows the super catch-up can reach $35,750.
What Actually Changed for High Earners
Under SECURE 2.0, any catch-up contribution made by a participant whose prior-year FICA wages exceeded $145,000 must now be designated as Roth. The IRS confirmed in November 2025 that the indexed 2026 threshold is $150,000, and the rule became operational on January 1, 2026.
What this means in practice:
- The wage test looks at the prior calendar year's Social Security wages from the same employer that sponsors the plan.
- It applies to catch-up contributions only—not the base $24,500 deferral.
- If your plan does not offer a Roth option, you legally cannot make catch-up contributions at all until the plan is amended.
- Self-employed workers and those with no FICA wages from the plan sponsor are not subject to the rule.
The IRS has said it will apply a "reasonable good-faith" enforcement standard through the end of 2026, and plan amendments must be in place by December 31, 2026.
Why It Matters for Retirement Planning
Losing the up-front deduction on catch-up dollars stings in the year you contribute, but Roth treatment can be a significant long-term win. Roth balances grow tax-free, are not subject to required minimum distributions during the original owner's lifetime, and give retirees a non-taxable bucket to draw from in years when pulling from a traditional IRA would push them into a higher bracket or trigger IRMAA Medicare surcharges.
For high earners who expect to stay in a high tax bracket in retirement—or who worry about rising future tax rates—being forced into Roth is closer to a feature than a bug.
Practical Steps to Take Now
- Confirm your plan is ready. Ask your plan administrator whether a Roth 401(k) option is available and whether catch-ups are being routed correctly.
- Check your prior-year W-2 Box 3. That FICA wage figure—not your gross salary—determines whether the rule applies.
- Adjust your tax withholding. Roth contributions do not lower current-year taxable income, so your federal withholding may need to rise to avoid an April surprise.
- Revisit your asset location. With more dollars now landing in Roth, consider holding higher-growth assets there and keeping income-producing holdings in traditional accounts.
- Coordinate with broader diversification. A larger Roth balance pairs naturally with a diversified mix that can include equities, bonds, and a measured allocation to precious metals or other inflation hedges held in a self-directed IRA.
The change is technical, but the bottom line is simple: if you are 50+ and a higher earner, your retirement contributions in 2026 will be split between pretax base deferrals and after-tax catch-ups, whether you planned for it or not.
Sources: IRS Newsroom, IRS Notice 2025-67, Fidelity Learning Center, Charles Schwab, Mercer Advisors, John Hancock Retirement