A Big Change to 401(k) Catch-Up Contributions Is Coming in 2026

Thanks to changes enacted under the SECURE 2.0 Act, starting in 2026, many catch-up contributions will be required to be made as Roth contributions, meaning after-tax rather than pre-tax. This is a meaningful shift, and one that deserves some advance planning.

Let’s walk through what’s changing, who it applies to, and how to think about it.

What’s New: Mandatory Roth Catch-Up Contributions

Starting in 2026, if you are:

• Age 50 or older, and

• Earn more than $145,000 in wages from the employer sponsoring the plan (indexed to inflation)

Then all of your catch-up contributions must be made as Roth contributions.

In other words, those dollars will go into your retirement plan after taxes, rather than reducing your taxable income today.

A few necessary clarifications:

• This rule applies only to catch-up contributions, not your standard $24,500 deferral.

• Employer matching contributions are not affected and will generally remain pre-tax.

• If your wages are below the threshold, you may still have the option to make catch-up contributions pre-tax, depending on your plan design.

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2026 Contribution Limits at a Glance

For 2026, the IRS has announced the following contribution limits:

• 401(k), 403(b), and 457 plans: $24,500 standard employee contribution

• Catch-up contributions (age 50+): $8,000

• Enhanced catch-up for ages 60–63: $11,250

• 403(b) additional catch-up for 15+ years of service: $3,000 (still subject to special eligibility rules)

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Why Congress Made This Change

Simply put, this is a revenue-raising provision.

Roth contributions generate tax revenue today rather than decades from now. From a policy perspective, this accelerates tax collection for higher earners while still preserving retirement savings incentives.

Is This a Bad Thing? Not Necessarily.

While losing a pre-tax deduction can feel like a negative, Roth dollars come with real advantages:

• Tax-free growth for the rest of your life

• No required minimum distributions on Roth accounts during your lifetime (for 401(k)s, this now applies once rolled to a Roth IRA)

• Greater flexibility in retirement tax planning

• More favorable treatment for heirs

From a planning perspective, it forces households to be more intentional about tax diversification rather than defaulting entirely to pre-tax savings. For many higher-earning households that already have substantial pre-tax balances, this shift may improve long-term outcomes by naturally building Roth assets that might otherwise never be funded.

Will My Employer Handle This Automatically?

Yes and no.

Employers and retirement plan providers are responsible for implementing the new Roth catch-up rules, but that does not mean every participant can assume everything will happen seamlessly without any action.

Here’s how this will generally work:

• Employers must identify who is subject to the rule.
  Each year, plans will review your prior-year wages from that employer to determine whether you are above the income threshold for Roth catch-up contributions.

• Payroll and recordkeeping systems will apply the rule.
  For affected employees, once regular contributions reach the standard limit, any additional catch-up contributions must be directed to the Roth portion of the plan. Many employers will build this logic directly into payroll, so the transition happens automatically in the background.

• But plan design still matters.
  Not all retirement plans currently offer Roth contributions. If a plan does not support Roth deferrals, it cannot accept catch-up contributions from employees who are required to make them as Roth. In those cases, catch-up contributions may be disallowed unless the plan is amended.

• Employee elections may still be required.
  Some plans will default catch-up contributions to Roth for higher earners, while others may require employees to update their contribution elections or acknowledge the change. This will vary by employer.

The bottom line:

While employers will handle the mechanics, employees should not assume there is nothing to do. If you are age 50 or older and expect your income to exceed the threshold, it is wise to confirm with your HR department or review your plan documents to understand how your plan will implement the new rules and whether any action is required on your part.