Are You Ready for the 2026 Catch-Up Contribution Rule Change?

If you're over 50 and contributing to a retirement plan like a 401(k), you've likely heard of catch-up contributions. Catch-up contributions are those extra amounts you're allowed to contribute to help boost your savings as retirement nears.

But starting in 2026, a major change is coming that could impact how these contributions are made, especially if you’re a higher-income earner. The new rule? Catch-up contributions may need to go into a Roth account instead of the traditional pre-tax route.

What Are Catch-Up Contributions?

For employees 50 and older, catch-up contributions are a way to save more for retirement beyond the standard annual limits. In 2025, workers in this age group can contribute an extra $7,500 to their 401(k) or 403(b), on top of the regular contribution limit.

A “super” catch-up was also introduced in 2025 for those aged 60–63, allowing even more to be contributed: up to $11,500 in total catch-up contributions for 2025.

These provisions give older workers a chance to bolster their retirement savings in their final working years.

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What's Changing in 2026?

Due to the SECURE 2.0 Act, beginning in 2026, employees 50 and over who earned more than $145,000 in FICA wages from a single employer in the prior year will be required to make any catch-up contributions on a Roth basis.

That means:

• The contributions are made with after-tax dollars.
• They won't reduce your taxable income in the year they’re made.
• The money grows tax-free and can be withdrawn tax-free in retirement.

Originally scheduled to take effect in 2024, this change was delayed to 2026 to give employers more time to adapt. That’s because if a retirement plan doesn’t offer a Roth option, affected employees would not be able to make catch-up contributions at all, prompting the need for amendments to the plan and system upgrades.

Who Is Affected?

Employees

If you’re 50 or older and earned more than $145,000 from your employer last year, your catch-up contributions will need to go into a Roth account starting in 2026. For some, this may alter their tax planning approach, especially if they prefer to reduce taxable income through pre-tax contributions.

Employers and Plan Sponsors

Companies need to offer Roth contribution capability if they want to continue allowing catch-up contributions for high earners. This could involve updating plan documents, payroll and recordkeeping systems, and internal communications and education strategies.

If your plan already includes a Roth option, you're in good shape. But if not, 2025 should be used to make updates before the new rules apply.

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Why This Matters

This change has both tax and operational implications.

For Employees

The loss of a pre-tax savings option could change how some workers plan their retirement contributions. While Roth contributions grow tax-free, they do require upfront taxation, which may not be favorable for everyone.

For Employers

Offering Roth contributions isn’t just a perk anymore. It will be required to stay compliant for plans offering catch-up contributions to high earners. That means employers need to confirm their plans to allow Roth contributions, review internal systems to track eligible participants, and coordinate between HR, payroll, and third-party administrators.

How to Prepare

If you're an employee, start by reviewing your prior year’s wages to determine if you exceed the $145,000 threshold. If you do, consider whether Roth contributions make sense for your overall retirement strategy. Since this change could impact your tax planning and long-term savings, it’s a good idea to consult with a financial advisor to walk through your options.

For employers and plan sponsors, now is the time to confirm whether your retirement plan already supports Roth contributions. If it doesn’t, begin the process of amending your plan to stay compliant. You should also coordinate with your third-party administrator to prepare tracking and reporting systems that reflect the new requirements. Finally, start internal communication efforts early so your employees understand how their contributions may be affected in 2026.

Catch-up contributions typically happen later in the year, but compliance needs to be in place at the start of 2026, not mid-year. Waiting could mean missing the window to allow eligible employees to make those extra contributions.

(Download Video Transcript)

Frequently Asked Questions

What if my retirement plan doesn't allow Roth contributions?

You’ll need to amend the plan to permit Roth contributions; otherwise, high earners won’t be allowed to make catch-up contributions.

Is the $145,000 income threshold based on total compensation?

No. It’s based specifically on FICA wages from a single employer.

Can employees opt out of catch-up contributions?

Yes, catch-up contributions are optional. However, those who want to make them must follow the Roth rule if they meet the income threshold.

Are self-employed individuals affected?

The rules apply to employer-sponsored retirement plans, so they may not directly impact self-employed individuals unless they participate in specific multi-employer arrangements.

Looking Ahead

The 2026 Roth catch-up rule is one of the more significant retirement plan changes in recent years. While the headline may not sound dramatic, it brings real tax and planning implications for both employers and employees.

Getting ahead of it by understanding the rules, updating systems, and educating your team can make the transition much smoother.

Have questions about how your retirement plan stacks up? Now’s the time to ask.