Roth Catch-Up Contributions Are Now Mandatory for High Earners in 2026
Part of our 2025 Tax Law Changes guide — the complete breakdown of the One Big Beautiful Bill Act.
A long-delayed retirement-plan rule finally takes effect in 2026, and it will surprise a lot of higher-paid employees at tax time. Under the SECURE 2.0 Act, many workers can no longer make traditional, pre-tax catch-up contributions — those catch-ups must now go in as Roth.
What the rule says
Beginning in 2026, catch-up contributions to workplace plans (401(k), 403(b), and governmental 457(b) plans) made by employees whose prior-year FICA wages exceeded a threshold — $145,000, indexed for inflation — must be made on a Roth (after-tax) basis. Lower-paid employees can still choose pre-tax catch-ups.
Why it matters
- No upfront deduction. Affected employees lose the immediate tax deferral on catch-up dollars, though qualified Roth withdrawals are tax-free later.
- The plan must offer Roth. If a plan doesn’t have a Roth option, affected participants may be unable to make catch-ups at all until it’s added.
- Payroll and plan coordination. Employers and recordkeepers must identify who is over the wage threshold and route their catch-ups correctly.
What to tell clients
- High earners: expect your catch-up contributions to be after-tax starting in 2026 — plan cash flow accordingly.
- Business-owner clients: confirm the plan document offers Roth and that payroll is configured for the wage test.
- Consider the longer-term Roth benefit rather than viewing this purely as a lost deduction.
Keep your skills current
New rules mean new questions from clients. Stay ahead with continuing education — browse the catalog, get a year of CPE with an Unlimited Access plan, or see all plans. Need your state’s rules? Check your CPE requirements.
This article is general information for tax and accounting professionals and is not legal, tax, or accounting advice. Dollar thresholds are indexed and rules change — always confirm current figures and effective dates with the IRS, plan documents, the FASB/AICPA, or qualified counsel before acting or advising clients.
