The Catch-Up Contribution Rule Change Many High-Earners Don’t Know About

What changed with Roth catch-up contributions in 2026 

Beginning with the 2026 plan year, Section 603 of the SECURE 2.0 Act requires higher-paid employees to make catch-up contributions as Roth contributions. There is no opt-out. If the rule applies to you, your catch-up dollars go in after tax or they don't go in at all. 

The provision was originally set for 2024, then delayed. The IRS issued final regulations in September 2025, and while those formally apply in 2027, the statutory requirement took effect Jan. 1, 2026, under a good-faith compliance standard. The delay is why so many executives filed this away as a future problem. 

Who the SECURE 2.0 Roth catch-up rule applies to 

You are subject to the requirement for 2026 if your Social Security wages from the employer sponsoring your plan exceeded $150,000 in 2025. That is Box 3 of your 2025 Form W-2. Total compensation, household income and your 2026 salary don't enter into it. 

Three details follow: 

1. The threshold is per employer. If you changed jobs in 2025, wages are generally measured at the employer whose plan you contribute to, not combined. 
2. Someone with no Social Security wages from the plan sponsor, such as a partner with only self-employment income, is generally not covered. 
3. The number is indexed. The statute set it at $145,000, the IRS raised it to $150,000 for this year's determination, and the figure governing 2027 will be announced this fall. 

What it costs this year 

In 2026 the standard catch-up for people 50 and older is $8,000 on top of the $24,500 base deferral limit, for $32,500 total. Under the old treatment, our director's $8,000 reduced her taxable income. At a 32% federal marginal rate that was worth about $2,560, and Connecticut income tax pushed it closer to $3,000. 

Now the same $8,000 goes in as Roth. Her savings rate hasn't changed, but roughly $3,000 in tax she used to defer is due this year. If her withholding reflects last year's assumptions, that shows up as a smaller refund or a balance due. The fix is usually a withholding adjustment or an estimated payment, and both are easy in November. 

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Why the long-term math may still favor you 

For many high earners, the change lands somewhere between neutral and advantageous. Roth dollars grow and come out tax-free in retirement if the qualified-distribution rules are met. Since 2024, Roth accounts inside a 401(k) are also exempt from required minimum distributions (RMDs) during the owner's lifetime. For an executive who expects pension income, deferred compensation and a large traditional 401(k) forcing out income at 73 or 75, a bucket that never has to be tapped is a real planning asset. 

There is a subtler point. Contribution limits are set in nominal dollars, so $8,000 of Roth shelters more after-tax wealth than $8,000 pre-tax, which still owes tax on the way out. 

The tax backdrop matters too. The One Big Beautiful Bill Act made current brackets permanent, with the top rate at 37% instead of reverting to 39.6%. If you expect a retirement bracket similar to or higher than today's, paying tax now at a known rate is a defensible trade. 

The age 60 to 63 super catch-up: $11,250 

Employees who turn 60, 61, 62 or 63 during the calendar year may contribute an enhanced catch-up of $11,250 for 2026 in place of the standard $8,000, for a total deferral of $35,750. 

Two things trip people up. The enhanced amount replaces the standard catch-up and doesn't stack on it. It is also optional for employers, so confirm with your plan administrator that your plan adopted it. 

The provision has no expiration date. What closes is your own eligibility: at 64 you revert to the standard catch-up. The extra $3,250 a year over four years is $13,000 of tax-advantaged room that disappears if unused. Above the wage threshold, the super catch-up must also be Roth. 

Three things to check before year-end 

Confirm your plan offers a Roth source. If a plan allows catch-up contributions but has no designated Roth option, an employee over the threshold can't make catch-up contributions at all. Most large employers added Roth early. The gap turns up at smaller and closely held companies, and the person affected is often the owner. 

Verify the switch on your paycheck. Many plans use a deemed Roth election, which reclassifies contributions to Roth automatically once you pass the base limit. Pull a recent pay stub and confirm the dollars are landing where you expect. 

Look at the rest of your return. Losing an $8,000 or $11,250 deduction raises your adjusted gross income (AGI), and AGI drives other thresholds: the state and local tax (SALT) deduction phaseout that begins at $505,000 of modified AGI, and Medicare income-related surcharges, assessed on a two-year lookback. 

Treat it as one decision 

This rule slipped past people because it arrived as a payroll change. Nobody had to sign anything. Yet your contribution strategy, withholding, mix of taxable, tax-deferred and tax-free savings, and retirement income sequencing all shifted at once. 

If you are 50 or older, earning above the threshold, and haven't reviewed how your catch-up contributions are being treated this year, that is an hour well spent with your advisor and your CPA before Dec. 31. 

At WHZ, our goal is to help you move forward with Absolute Confidence. Unwavering Partnership. For Life. Schedule a complimentary discovery session at whzwealth.com or call 860-928-2341. 

Authored by WHZ Associate Vice President, Wealth Advisor Jonathan Mathews, CFP®. AI may have been used in the research and initial drafting of this piece. Retirement plan contribution limits, wage thresholds, and tax rules referenced here are current as of the date of publication and are subject to change. Plan provisions vary; whether a specific catch-up feature is available to you depends on your employer’s plan Libre Franklin document. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. WHZ Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084, 860.928.2341. http://www.whzwealth.com. 

RELATED FAQs 

What is the new Roth catch-up contribution rule? 

Under Section 603 of the SECURE 2.0 Act, employees age 50 and older whose prior-year Social Security wages from their plan-sponsoring employer exceeded the indexed threshold must make all 401(k), 403(b), or governmental 457(b) catch-up contributions on a Roth basis rather than pre-tax. The requirement took effect for plan years beginning January 1, 2026. 

What is the wage threshold for 2026, and is it $145,000 or $150,000? 

Both figures are correct in different contexts. SECURE 2.0 set the statutory threshold at $145,000, but it is indexed for inflation. The IRS set the amount governing 2026 at more than $150,000 in 2025 Social Security wages, reported in Box 3 of the Form W-2. The threshold for 2027 will be announced in the fall of 2026. 

Does the rule use my total compensation or something narrower? 

It uses Social Security (FICA) wages from the employer that sponsors your plan, as reported in Box 3. That is not the same as total compensation or household income. Wages from a different employer generally are not added in, and an individual with no FICA wages from the plan sponsor, such as a partner with only self-employment income, is generally not subject to the requirement. 

What are the 2026 catch-up contribution limits? 

The base elective deferral limit is $24,500. The standard catch-up for those 50 and older is $8,000, for a total of $32,500. Employees who turn 60, 61, 62, or 63 during the year may contribute an enhanced catch-up of $11,250 instead, for a total of $35,750, if their plan offers it. 

Does the age 60 to 63 super catch-up expire? 

The provision itself has no scheduled expiration date. What is limited is individual eligibility: the enhanced limit applies only during the calendar years in which you are 60, 61, 62, or 63, and it reverts to the standard catch-up at 64. It is also optional for employers, so your plan must have adopted the feature. 

What happens if my employer’s plan does not offer Roth contributions? 

If a plan has no designated Roth source, employees above the wage threshold cannot make catch-up contributions at all. Employees below the threshold may still make them pre-tax. This is most likely to affect smaller and closely held employers, and it often affects the business owner directly. 

Are Roth 401(k) balances subject to required minimum distributions? 

No. A separate SECURE 2.0 provision eliminated lifetime required minimum distributions from designated Roth accounts in employer plans beginning in 2024. That makes Roth catch-up dollars useful for executives who expect substantial forced income from other sources in retirement. 

Is being forced into Roth catch-up contributions a bad outcome? 

Not necessarily. You lose a current-year deduction, which affects cash flow and withholding now. In exchange, those dollars grow and are distributed tax-free, avoid lifetime RMDs, and shelter more real value than the same nominal amount contributed pre-tax. With the OBBBA brackets now permanent, paying tax at a known current rate is a reasonable trade for many high earners.