If you’re 50 or older and earning more than $150,000 a year, an important change is coming to how you can save for retirement. Starting in 2026, the SECURE 2.0 Act requires high-income earners to make all catch-up contributions to their employer-sponsored retirement plans on a Roth (after-tax) basis. This shift represents a significant departure from the traditional pre-tax catch-up contributions many workers have relied on for years.
Whether you’re already making catch-up contributions or planning to start soon, understanding this new rule is critical to maximizing your retirement savings strategy.
What Are Catch-Up Contributions?
Catch-up contributions allow workers age 50 and older to save additional money in their employer-sponsored retirement plans beyond the standard annual contribution limits. These extra contributions help older workers boost their retirement savings during their peak earning years.
For 2026, the standard 401(k) contribution limit is $24,500. Workers age 50 and older can contribute an additional $8,000 in catch-up contributions, bringing their total potential contribution to $32,500. There’s even a “super catch-up” provision for those aged 60-63, allowing an extra $3,250 on top of the standard catch-up amount.
The New Roth Requirement: Who’s Affected?
Beginning January 1, 2026, if you meet both of the following criteria, your catch-up contributions must be made to a Roth account:
1. You are age 50 or older (by December 31 of the year)
2. Your FICA wages exceeded $150,000 in the prior year
The $150,000 threshold is based on your Social Security wages (shown in Box 3 of your W-2 form) from the previous calendar year. This amount will be indexed for inflation, so it may increase in future years. Only wages from the employer sponsoring your current retirement plan count toward this limit.
Important note: This rule only applies to employer-sponsored plans like 401(k)s, 403(b)s, and governmental 457(b) plans. IRA catch-up contributions are not affected and can still be made on either a traditional (pre-tax) or Roth basis.
How This Changes Your Retirement Savings Strategy
The shift to mandatory Roth catch-up contributions means you’ll lose the immediate tax deduction you may have enjoyed with pre-tax contributions. Instead of reducing your current taxable income, you’ll pay taxes on these contributions now. However, this comes with a significant long-term benefit: tax-free withdrawals in retirement.
Traditional Pre-Tax Contributions: Reduce your taxable income today, but you’ll pay taxes on withdrawals in retirement.
Roth Contributions: Made with after-tax dollars (no immediate tax benefit), but qualified withdrawals of both contributions and earnings are completely tax-free if you’re at least 59½ years old and meet the five-year rule.
For high earners, this mandatory Roth treatment could actually be advantageous if you expect to be in a similar or higher tax bracket in retirement, or if you want to diversify your tax exposure across different account types.
What You Need to Do Now
1. Check if your plan offers Roth contributions. If your employer-sponsored plan doesn’t currently offer a Roth option, they’ll need to add one by 2026, or high earners will be prohibited from making catch-up contributions entirely. Contact your HR department or plan administrator to confirm.
2. Review your 2025 FICA wages. Look at Box 3 of your 2025 W-2 (which you’ll receive in early 2026) to determine if you’ll be subject to the Roth catch-up requirement for 2026 contributions.
3. Adjust your contribution elections. If you’re affected, you may need to update your payroll elections. Many plans will automatically treat your catch-up contributions as Roth contributions if you meet the income threshold, but it’s wise to verify with your plan administrator.
4. Plan for the tax impact. Since Roth contributions don’t reduce your current taxable income, your take-home pay will be lower than if you were making pre-tax catch-up contributions. Adjust your budget accordingly.
5. Consider alternative savings vehicles. If you prefer pre-tax contributions, you might explore other options like traditional IRA contributions, Health Savings Accounts (HSAs), or nonqualified deferred compensation (NQDC) plans, depending on your eligibility and situation.
2026 Contribution Limits at a Glance
| Contribution Type | 2026 Limit |
| Standard 401(k) contribution (all ages) | $24,500 |
| Catch-up contribution (age 50+) | $8,000 |
| Super catch-up (age 60-63) | Additional $3,250 |
| Income threshold for Roth requirement | $150,000 (2025 FICA wages) |
The Bottom Line
The SECURE 2.0 Act’s mandatory Roth catch-up requirement for high earners represents a fundamental shift in retirement planning. While losing the upfront tax deduction may feel like a setback, the trade-off is tax-free growth and withdrawals in retirement—a potentially valuable benefit for those who can afford the higher current-year tax burden.
The key is preparation. Review your situation now, understand how the rule affects you, and work with your financial advisor or tax professional to optimize your retirement savings strategy. With proper planning, you can turn this regulatory change into an opportunity to build a more tax-diversified retirement portfolio.
Disclaimer: This blog post is for informational purposes only and does not constitute financial or tax advice. Retirement planning rules are complex and individual circumstances vary. Please consult with a qualified financial advisor or tax professional to discuss your specific situation and determine the best strategy for your retirement goals.
