Starting in 2026, Section 603 of the SECURE 2.0 Act changes how catch-up contributions work for higher-earning participants. Employees aged 50 and older who earned more than $145,000 in FICA wages from their employer in the prior calendar year must now make all catch-up contributions on a Roth (after-tax) basis. The IRS has since indexed that $145,000 figure for inflation. For the 2026 Plan Year, the applicable threshold is $150,000, based on 2025 W-2 Box 3 wages.
This is not optional. Plans that do not accommodate this requirement risk blocking eligible employees from making catch-up contributions entirely.
What Happens If Your Plan Does Not Offer a Roth Option?
This is the detail that catches many Plan Sponsors off guard. If your 401(k) Plan does not currently include a Roth contribution feature, affected employees will not be permitted to make any catch-up contributions beginning January 1, 2026. The rule does not allow pre-tax catch-up contributions as an alternative for these Participants. It is Roth or nothing.
Plan Sponsors should review their plan documents now and work with their administrator to add a Roth option. Plan amendments must generally be adopted by December 31, 2026, but the operational requirement takes effect on January 1, 2026. Waiting until the amendment deadline could leave employees unable to contribute for most of the year.
The Payroll Mechanics Behind the Switch
The standard deferral limit for 2026 is $24,500. Contributions up to that amount can still be made on a pre-tax or Roth basis, according to the Participant’s existing elections. Only the catch-up portion, up to $8,000 for those aged 50 to 59 or up to $11,250 for those aged 60 to 63 under the “super catch-up” provision, must be designated as Roth for affected employees.
Employees should monitor pay stubs carefully during the transition to confirm contributions are categorized correctly and to avoid unexpected changes in take-home pay.
Who Is Exempt From the Mandatory Roth Catch-Up?
The rule targets FICA wages from the prior calendar year at the same employer. This creates two notable exemptions:
- An employee who changed jobs in 2025 and did not earn more than $150,000 from the new employer, even if total earnings across all employers exceeded that amount, is not subject to the Roth catch-up requirement in 2026. FICA wages are calculated separately for each employer under the final regulations.
- Sole proprietors filing on Schedule C who do not receive W-2 wages are generally exempt. The same applies to partners and LLC owners who receive K-1 income rather than W-2 compensation.
Plan Sponsors and Participants with questions about these exemptions should consult their Plan Administrator or tax advisor.
Frequently Asked Questions
What are the Roth catch-up contribution limits starting in 2026?
Employees aged 50 to 59 can make catch-up contributions of up to $8,000. Employees aged 60 to 63 may contribute up to $11,250 under the super catch-up provision. These limits apply on top of the standard $24,500 elective deferral limit.
How does SECURE 2.0 impact Roth catch-up eligibility?
Section 603 of SECURE 2.0 requires employees aged 50 or older who earned more than $150,000 in prior-year FICA wages to make catch-up contributions as Roth. Employees earning below this threshold can still choose pre-tax or Roth treatment for their catch-up contributions.
Which retirement accounts support the SECURE 2.0 Roth catch-up contributions?
The mandatory Roth catch-up rule applies to 401(k), 403(b), and governmental 457(b) Plans. SIMPLE IRAs, SARSEPs, and certain 403(b) arrangements are excluded. Traditional and Roth IRAs are not affected by this requirement.