A quiet change written into the SECURE 2.0 Act finally takes effect on January 1, 2026, and it removes a familiar tax lever from a large group of near-retirement workers. Employees age 50 or older who earned more than $150,000 in FICA wages from their current employer during 2025 will no longer be able to make pre-tax catch-up contributions to their 401(k), 403(b), or governmental 457(b) plan. Every catch-up dollar must be routed into a Roth account, according to guidance summarized by Kiplinger and Mercer.
What the New Rule Actually Says
Under Section 603 of SECURE 2.0, the standard employee deferral limit rises to $24,500 in 2026, per the IRS release covered by Kiplinger. Workers age 50 and older can add an $8,000 catch-up contribution on top, and workers age 60 through 63 qualify for an enhanced "super catch-up" of $11,250 for the year. What changes for high earners is not the amount — it is the tax treatment. For anyone above the $150,000 wage threshold in the prior year, the base $24,500 can still be pre-tax, but the $8,000 or $11,250 catch-up must be Roth.
Who Is and Is Not Affected
The rule reaches employees only. FICA wages are the trigger, so self-employed individuals — including partners and sole proprietors — do not have "wages" for this purpose and remain able to make pre-tax catch-up contributions, according to Lathrop GPM's analysis of the final IRS regulations. The $150,000 threshold applies per employer, so a worker who changed jobs mid-2025 may fall below the limit even with high total earnings. The threshold will be indexed for inflation in future years.
Why This Matters for Retirement Planning
For high-income savers who counted on catch-up contributions to reduce current taxable income, the change is a real shift. An $8,000 pre-tax catch-up at a 32% marginal rate delivered a $2,560 current-year tax reduction. Under the new rule, that immediate deduction disappears — but the Roth contribution grows tax-free and comes out tax-free in retirement, which can be more valuable for retirees who expect to stay in a high bracket, face large future required minimum distributions, or want to leave tax-free assets to heirs.
Practical Steps Before Year-End
First, confirm whether your 2025 W-2 wages from your current employer will exceed $150,000. If they will, expect your 2026 catch-up contributions to be redirected to the Roth side of your plan automatically — assuming your employer has added a Roth option. If your plan does not currently offer Roth 401(k) contributions, catch-up contributions may be suspended entirely until the plan is amended, so ask your HR or benefits team now.
Second, revisit your 2026 tax projection. Losing the pre-tax deduction on the catch-up amount raises taxable income by $8,000 or $11,250, which can affect quarterly estimated taxes, IRMAA thresholds two years out, and eligibility for other phase-outs.
Third, consider whether the Roth pivot changes your broader mix. Many high earners already skew heavily toward tax-deferred balances. A forced Roth catch-up can be a useful counterweight, giving future retirees more control over which "tax bucket" to draw from each year.
The Bigger Picture
The Roth catch-up mandate is part of a broader legislative push to shift retirement savings toward after-tax dollars, alongside the age-60-to-63 super catch-up and higher 2026 contribution limits across IRAs, 401(k)s, and SEP plans. For workers near retirement, the practical takeaway is simple: verify your 2025 wage figure, confirm your plan supports Roth contributions, and rebuild your 2026 savings plan around the new default before January 1.
Sources: Internal Revenue Service, Kiplinger, Mercer, Lathrop GPM, Thrift Savings Plan