For years, workers age 50 and older could throw an extra pre-tax catch-up contribution into their 401(k) and reduce their current-year tax bill. Starting January 1, 2026, that door closes for higher-paid employees. Under Section 603 of the SECURE 2.0 Act — codified at IRC § 414(v)(7) — catch-up contributions from affected workers must be designated Roth. The IRS finalized the regulations in 2025 and set the applicable wage threshold in Notice 2025-67.
Who the Rule Applies To
The mandatory Roth catch-up applies to participants in 401(k), 403(b), and governmental 457(b) plans who are age 50 or older and whose FICA wages from the plan-sponsoring employer exceeded $150,000 in the preceding calendar year. The statute uses $145,000 as its baseline, indexed for inflation in $5,000 increments — which is why the 2025 lookback figure lands at $150,000.
Two nuances catch people off guard:
- Only wages from the sponsoring employer count. Self-employment income, investment income, and wages from other employers do not push you across the threshold.
- The lookback is the prior year. A high 2025 bonus can force you into Roth-only catch-ups in 2026 even if your 2026 income drops.
The 2026 Contribution Numbers
For 2026, the base 401(k) elective deferral limit rises to $24,500. On top of that:
- Age 50–59 and 64+: $8,000 catch-up, for a $32,500 combined maximum.
- Age 60–63 (the SECURE 2.0 "super catch-up"): $11,250 catch-up, for a $35,750 combined maximum.
If you cross the $150,000 wage threshold, the catch-up portion — $8,000 or $11,250 — must be routed to a Roth source. The base $24,500 is unaffected and can still be pre-tax.
Why This Changes the Math
Roth contributions do not reduce taxable income in the year they are made. For a worker in the 24% federal bracket, an $8,000 catch-up that used to shave roughly $1,920 off the current tax bill now costs full freight up front. The trade is durable, though: qualified Roth withdrawals in retirement are tax-free, and Roth balances are not subject to lifetime required minimum distributions in the account holder's own account.
For workers who expect to retire into a lower bracket, this is a genuine cost. For those who expect flat or rising brackets — or who already carry large pre-tax balances that will drive up future RMDs — being forced into Roth is closer to a favor than a penalty.
The Plan-Design Trap
The final regulations include a provision that surprises many high earners: if your employer's plan does not offer a Roth 401(k) option, the plan cannot route your catch-up to a Roth source, and you are not permitted to make catch-up contributions at all until the plan is amended. Large plan sponsors have mostly added Roth features in advance of the deadline, but not every plan has. Before your first payroll of 2026, confirm with HR or the plan administrator that a Roth deferral election is available.
Planning Moves for 2026
- Check the lookback wage. If your 2025 W-2 FICA wages from your current employer exceeded $150,000, plan for Roth catch-ups in 2026 regardless of 2026 income.
- Adjust cash flow. A Roth catch-up costs more today. Budget for the higher federal and state withholding rather than discovering it in April.
- Confirm the plan offers Roth deferrals. If not, ask HR when the amendment is coming — otherwise your catch-up capacity is temporarily frozen.
- Coordinate with your IRA. The 2026 IRA limit is $7,500, with a $1,100 catch-up for savers 50 and older ($8,600 total). IRA catch-ups are unaffected by the Roth mandate.
- Reassess the Roth-vs-traditional mix. For workers already deferring the full $24,500 pre-tax, an $8,000 Roth catch-up moves the overall balance meaningfully toward tax-diversified retirement savings — a feature, not a bug, for many retirement plans.
The rule is narrow in scope but wide in reach: nearly every retirement saver over 50 with a strong income and workplace plan is affected. Treat 2026 as the year to reconfirm your deferral election and update your withholding — the default settings that worked in 2025 will not necessarily work now.
Sources: IRS, IRS Notice 2025-67, The CPA Journal, Fidelity, Quarles Law Firm, 24/7 Wall St.