- Workers 50+ who earned over $145,000 from a single employer in 2025 must make all 2026 additional deferrals as Roth—pre-tax is no longer an option for them.
- The standard extra deferral for ages 50–59 and 64+ is $8,000. Workers aged 60–63 qualify for a new “super” amount of $11,250 under SECURE 2.0.
- If your plan has no designated Roth feature, the extra contribution is blocked entirely in 2026—$0 allowed, regardless of income.
- The IRS finalized this rule in January 2025 after a two-year grace period. There is no further delay.
What Did SECURE 2.0 Actually Change?
The SECURE 2.0 Act, signed December 29, 2022, rewrote the rules for age-50-plus deferrals effective January 1, 2026. For decades, workers could add an extra $7,500 pre-tax to their 401(k) on top of the base limit. That option survives—but only for earners at or below the $145,000 threshold.
Above that wage level, every extra dollar must go into a designated Roth account. You pay ordinary income on the contributed amount now. The money then grows exempt from further levy, and qualified withdrawals in retirement are fully sheltered as well.
Why the Two-Year IRS Delay?
The IRS issued Notice 2023-62 suspending enforcement until December 31, 2025. Plans needed time to update payroll systems, and many small employers had never offered a designated voluntary sub-account inside their 401(k). Starting January 1, 2026, the new rule is fully in effect with no further grace period.
Who Is Affected: The $145,000 Threshold
The test looks back one year. Your employer checks your FICA wages (W-2 Box 3 or Box 5) from 2025—only from that single employer. Two employers each paying $100,000 = neither triggers the requirement. One employer paying $180,000 = mandatory pay-now treatment in 2026 on every extra dollar you defer.
| 2025 FICA Wages (Single Employer) | Ages 50–59 & 64+ | Ages 60–63 | Treatment |
|---|---|---|---|
| $145,000 or less | Up to $8,000 | Up to $11,250 | Pre-tax or Roth — your choice |
| Over $145,000 | Up to $8,000 | Up to $11,250 | Roth only — no exceptions |
| Any income, plan has no designated after-tax feature | $0 | $0 | Extra deferrals blocked entirely |
2026 Contribution Limits: The Full Picture
| Contribution Type | Age Group | 2026 Limit |
|---|---|---|
| Base employee deferral | Under 50 | $24,500 |
| Standard catch-up | 50–59 and 64+ | $8,000 |
| Super catch-up (SECURE 2.0) | 60, 61, 62, 63 | $11,250 |
| Total employee max (ages 60–63) | 60–63 | $35,750 |
| Overall limit (all sources) | Any age | $72,000 |
Tax Impact: Paying Now vs. Paying Later
Forcing high earners into pay-now treatment shifts when the IRS collects. Standard deferrals delay ordinary income levy until withdrawal—still a useful strategy if you expect lower rates in retirement. The designated voluntary sub-account approach means settling up in the contribution year, but every dollar—including all investment growth—exits completely sheltered in retirement.
| Factor | Pre-Tax Catch-Up | Mandatory Roth Catch-Up |
|---|---|---|
| Levy in contribution year | None on contribution | Ordinary income applies |
| Growth subject to levy? | Yes, at withdrawal | No (qualified distribution) |
| Lifetime mandatory withdrawals | Required starting at 73 | None from designated after-tax 401(k) |
| Heirs benefit? | Heirs pay ordinary income | Heirs inherit sheltered |
| Available to earners over $145k? | No — from 2026 | Yes |
What If Your Plan Has No Roth Option?
Employers who wanted to preserve the age-50-plus add-on for high earners had to amend their plan to include a designated after-tax sub-account by January 1, 2026. If yours still lacks one, you have two paths: maximize the base $24,500 deferral, and separately consider a backdoor Roth IRA strategy outside the plan (if eligible or via pre-tax-to-voluntary conversion).
State Tax: The Extra Layer
Most states conform to federal treatment: you pay state income levy on the contributed amount now and owe nothing on qualified distributions in retirement. California (13.3% top rate) and New York add meaningfully to the upfront cost of this mandatory pay-now approach. States like Nevada, Texas, and Florida have no income levy at all—every dollar of future qualified distributions stays in your pocket.
Action Checklist
- Check your 2025 FICA wages from each employer. If any single employer paid you more than $145,000, all additional 2026 deferrals must use pay-now treatment in the designated after-tax sub-account.
- Verify your plan has a designated after-tax feature. Log in to your 401(k) portal or call HR. No such option = no extra deferrals at all for high earners in 2026.
- Confirm your age group. Turn 60–63 in 2026? Your extra deferral limit is $11,250, not $8,000—a $3,250 difference worth checking.
- Update your payroll deferral election to reflect the new limits. For ages 60–63 maxing out: $24,500 base + $11,250 = $35,750 total employee contribution.
- Run a 2026 income projection with your CPA. Pay-now treatment means higher taxable income this year—ensure withholding or estimated payments cover the gap.
- Review beneficiary designations on the after-tax sub-account—it may appear separately from your standard balance in the portal.
- If your plan lacks the after-tax designation option, ask HR immediately—adding the feature requires a formal plan amendment and takes time to implement.