New Roth Retirement Catch-Up Rules For 2026: What To Know

If you’ve received a notice from your employer about changes to your retirement contributions, you’re not alone. My husband received one this week explaining that certain retirement catch-up contributions must now be made on a Roth basis rather than a traditional pre-tax basis.

For some workers age 50 and older, the change means losing an immediate tax deduction—or, more precisely, the ability to exclude certain retirement contributions from current taxable income. That doesn’t mean you can’t continue saving for retirement. It means some of your retirement savings may be taxed differently.

Here’s what you need to know.

What Are Retirement Catch-Up Contributions?

Most workers who participate in an employer-sponsored retirement plan, such as a 401(k), can contribute a portion of their wages to their retirement accounts, subject to annual limits. For 2026, the standard employee contribution limit for most 401(k), 403(b), and governmental 457(b) plans is $24,500.

Workers who turn 50 or older by the end of the year can generally contribute more. These additional amounts are called catch-up contributions. For 2026, the catch-up contribution limit is $8,000 for eligible workers age 50 and older, bringing the potential total employee contribution to $32,500.

Thanks to another provision of SECURE 2.0, workers who turn 60, 61, 62, or 63 during the year may qualify for an even higher catch-up contribution of $11,250. That brings their potential total to $35,750.

Until this year, eligible employees generally could make their catch-up contributions with pre-tax dollars (for a traditional plan) or with Roth dollars, depending on the options offered by their plans. Now, some employees no longer have that choice.

What’s Changing For 2026?

Beginning January 1, 2026, certain higher-income employees must make their catch-up contributions as designated Roth contributions. The rule generally applies to catch-up contributions in 401(k), 403(b), and governmental 457(b) plans, including SIMPLE 401(k) arrangements. Different contribution limits may apply depending on the type of retirement plan.

The requirement applies if you meet both of the following conditions:

You’re eligible to make catch-up contributions because you’ll be age 50 or older by year-end.
Your FICA wages from the employer sponsoring the retirement plan exceeded $150,000 in 2025.

If both conditions apply, your 2026 catch-up contributions must be designated Roth contributions. This means you’ll pay income tax on those contributions now rather than receiving the immediate tax benefit of traditional pre-tax contributions.

Importantly, the rule doesn’t require all of your retirement contributions to be designated Roth. It applies only to the catch-up portion.

Roth contributions made earlier in the year can count toward the requirement. If you’ve already made enough designated Roth contributions during the year to cover your catch-up amount, subsequent catch-up contributions may be made on a pre-tax basis. However, your plan may automatically designate those later contributions as Roth unless you make a different election under the plan’s procedures.

What Does This Mean For Your Taxes?

The main difference between traditional pre-tax contributions and Roth contributions is when you pay income tax.

With traditional pre-tax 401(k) contributions, you generally reduce your taxable wages in the year you contribute. The money grows tax-deferred, and withdrawals are generally taxable in retirement.

With designated Roth 401(k) contributions, you don’t receive that upfront income tax benefit. Instead, you include the contributions in your taxable income for the year. The trade-off is that qualified Roth distributions in retirement, including earnings, are generally tax-free. To qualify, the distribution generally must satisfy the five-year rule and certain other conditions, such as reaching age 59½.

For workers subject to the new requirement, here’s how the tax treatment of catch-up contributions could change:

Suppose you’re 55 years old and earned $175,000 in FICA wages from your employer in 2025. In 2026, you contribute the maximum $24,500 to your traditional pre-tax 401(k) and an additional $8,000 allowed under the catch-up rules. You can still make the regular $24,500 contribution on a pre-tax basis. Assuming you haven’t already made designated Roth contributions during the year, your $8,000 catch-up contribution must be Roth.

If you’re in the 24% federal marginal income tax bracket, making that $8,000 contribution as Roth rather than pre-tax could mean paying approximately $1,920 more in federal income taxes for the year, assuming the entire amount would otherwise reduce income taxed at that rate.

Of course, the Roth contribution may eventually provide a tax advantage when you withdraw the funds in retirement. Whether that’s a good trade-off depends on your circumstances, including your current tax bracket, your anticipated retirement income, and future tax rates.

Does the $150,000 Threshold Include Your Spouse’s Income?

No. The $150,000 threshold, which is indexed for inflation, isn’t based on your household income, your adjusted gross income, or your joint tax return. It is based on your FICA wages from the employer sponsoring your retirement plan during the last calendar year.

Let’s say you’re married and file jointly and earned $120,000 in FICA wages in 2025, while your spouse earned $200,000. Even though your combined wages were $320,000, you wouldn’t be subject to the mandatory Roth catch-up requirement for 2026 because your individual FICA wages didn’t exceed $150,000. Your spouse could be subject to the rule.

What If Your Retirement Plan Doesn’t Offer Roth Contributions?

Not every employer-sponsored retirement plan offers designated Roth contributions. Under the new rules, an employer generally isn’t required to add a Roth feature simply because some employees are subject to the mandatory Roth catch-up requirement.

However, if you’re subject to the rule and your plan doesn’t offer Roth catch-up contributions, you generally won’t be able to make catch-up contributions to that plan. You’re effectively cut off, but you may still make regular contributions up to the applicable limit.

Will Your Employer Automatically Change Your Contributions?

Possibly. Under IRS rules, retirement plans may use a deemed Roth election. Essentially, if you’re subject to the mandatory Roth catch-up requirement, your plan can automatically treat your catch-up contributions as Roth contributions, even if you previously elected to make pre-tax contributions.

For example, suppose you’re focused on maximizing your traditional pre-tax 401(k) contributions. Once your contributions reach the regular annual limit, your employer’s plan may automatically direct additional eligible catch-up contributions into a Roth account. You wouldn’t necessarily need to submit a new Roth election for that to happen.

But there are safeguards. The plan must provide a deemed Roth election, and employees must have an effective opportunity to make a different election. That could include choosing to stop making catch-up contributions altogether. However, an employee who’s subject to the Roth requirement can’t simply opt out of Roth treatment and continue making pre-tax catch-up contributions unless they’ve made sufficient designated Roth contributions earlier in the year to satisfy the requirement.

If you’ve received a notice, check whether the change will happen automatically or whether you need to update your contribution elections. You should also confirm when the change takes effect and how it may affect your take-home pay.

Does This Apply To IRAs?

No. The mandatory Roth catch-up requirement under this provision doesn’t apply to traditional or Roth IRAs. IRAs have separate contribution limits and rules.

For 2026, the regular IRA contribution limit is $7,500, with an additional $1,100 catch-up contribution available to individuals age 50 and older.

Why Is This Happening Now?

The mandatory Roth catch-up requirement was included in SECURE 2.0, which became law in December 2022. Originally, the provision was scheduled to take effect in 2024. However, employers, payroll providers, and retirement plan administrators raised concerns about the time needed to update their systems and implement the new rules.

In response, the IRS announced a two-year administrative transition period, effectively delaying enforcement until 2026. In September 2025, the Treasury Department and the IRS issued final regulations, including how employers determine which employees are covered and how plans can correct certain mistakes.

Although the final regulations generally apply beginning in 2027, the IRS made clear that the administrative transition period ended on December 31, 2025. Plans must comply with the statutory Roth catch-up requirement beginning in 2026. That’s why workers like my husband may be receiving notices about the change now, even though the underlying legislation was enacted several years ago.

What Should You Do If You Receive A Notice?

If your employer or retirement plan administrator has notified you that you must make catch-up contributions on a Roth basis, don’t ignore it. Here’s what you should look out for:

Check your 2025 wages. Determine whether your FICA wages from the employer sponsoring the plan exceeded $150,000.
Review your current contributions. Find out how much you’re contributing and whether you’re on track to exceed the regular annual limit.
Confirm your plan’s Roth options. Determine whether Roth catch-up contributions are available and whether your employer will automatically adjust your contributions.
Consider the tax impact. If you’re accustomed to making the maximum pre-tax contributions, the new rule could increase your taxable income.
Check your withholding. Higher taxable wages could affect the amount of income tax withheld from your paycheck or the estimated payments you need to make.

The Bottom Line

For workers already maximizing their retirement savings, the new Roth catch-up rule changes when they pay taxes on part of their retirement contributions. That doesn’t necessarily make Roth contributions a bad deal. For some taxpayers, paying tax now in exchange for potentially tax-free withdrawals in retirement may be advantageous. But it does mean that some workers who previously chose to make all their retirement contributions on a pre-tax basis no longer have that option for their catch-up contributions.

If you received a notice from your employer this year, it’s worth taking a closer look before your next paycheck—or your next tax return—comes as a surprise.