Mandatory Roth Catch-Up 2026: What High Earners Must Know

Written by

in

401(k) · SECURE 2.0 · 2026
  • 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.

Catch-Up Rules by Income Level (2026)
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
Note: The $145,000 threshold is indexed to inflation and will adjust annually. Verify the current figure at IRS.gov before making your 2026 election.

2026 Contribution Limits: The Full Picture

2026 401(k) Contribution Limits
Contribution Type Age Group 2026 Limit
Base employee deferralUnder 50$24,500
Standard catch-up50–59 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
Super catch-up window is exactly four years. The year you turn 64, the limit drops back to $8,000. Workers born in 1963–1966 are in the sweet spot for the 2026 super catch-up.
Catch-Up Contribution Limits 2024–2026 by Year and Earner Type Catch-Up Contribution Limits: 2024 → 2026 Ages 50+ only. Base deferral ($24,500) not shown. Catch-Up Limit ($) $0 $4k $8k $10k $12k $7,500 2024 Any earner Standard $7,500 2025 Grace period Standard OK $8,000 2026 ≤$145k income Standard or contributed $8,000 2026 >$145k income After-tax ONLY $11,250 2026 Ages 60–63 Super add-on Standard or contributed (earner’s choice) Contributed mandatory (>$145k) Super add-on deferral (ages 60–63)

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.

Pre-Tax vs. Mandatory Roth Catch-Up: Key Differences
Factor Pre-Tax Catch-Up Mandatory Roth Catch-Up
Levy in contribution yearNone on contributionOrdinary income applies
Growth subject to levy?Yes, at withdrawalNo (qualified distribution)
Lifetime mandatory withdrawalsRequired starting at 73None from designated after-tax 401(k)
Heirs benefit?Heirs pay ordinary incomeHeirs inherit sheltered
Available to earners over $145k?No — from 2026Yes

What If Your Plan Has No Roth Option?

Critical: If your employer’s plan has no designated after-tax sub-account feature, workers earning over $145,000 cannot make any additional deferrals in 2026—neither sheltered nor pre-tax. The limit is $0. Verify your plan’s options before your first paycheck of 2026.

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

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. Review beneficiary designations on the after-tax sub-account—it may appear separately from your standard balance in the portal.
  7. 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.
Honest boundary: The $145,000 wage threshold adjusts for inflation each year. All figures reflect IRS guidance as of early 2026. Confirm current limits at IRS.gov or with your benefits department before making elections. This article is not financial or legal advice.