The 2026 Rule Change That Forces Workers Earning Over $145,000 Into Roth Catch-Up Contributions

Starting January 1, 2026, workers who earned more than $145,000 in the prior year can no longer make pre-tax catch-up contributions to their 401(k). Under Section 603 of SECURE 2.0, codified at IRC § 414(v)(7), those contributions must be designated Roth. This is the biggest structural change to catch-up contributions since they were introduced in 2001, and plan administrators are required to enforce it.

The threshold is based on last year’s W-2, not this year’s income

The rule looks backward. IRS Notice 2025-67 sets the applicable wage threshold at $150,000 for 2025, meaning that if your W-2 wages from the sponsoring employer exceeded that amount in 2025, your catch-up contributions in 2026 must go into a Roth account. The statutory threshold of $145,000 is indexed for inflation in $5,000 increments, which is why the 2025 lookback number moved to $150,000.

The practical consequence is that an employee who had a large bonus in 2025 but a lower income in 2026 could still be subject to the rule even if their current income is lower. A sales executive who hit $160,000 in 2025 due to a commission spike, then returned to $130,000 base pay in 2026, is still locked into Roth catch-up treatment for all of 2026.

What the numbers look like in 2026

The 2026 base 401(k) deferral limit is $24,500. Workers 50 and older can add a catch-up contribution of $8,000, bringing the total to $32,500. Workers aged 60 through 63 qualify for the SECURE 2.0 “super catch-up” of $11,250 instead of $8,000, for a combined maximum of $35,750. For anyone above the wage threshold, every dollar of that catch-up must go into a designated Roth account.

Roth contributions do not reduce taxable income in the year they are made. For a worker in the 24% bracket (single filers earning between $105,701 and $201,775 in 2026), an $8,000 Roth catch-up increases current-year taxes compared to a pre-tax contribution. Workers aged 60 through 63 using the super catch-up face a comparable upfront tax cost at that bracket.

When forced Roth treatment works in your favor

The Roth structure eliminates the tax cascade that traditional 401(k) balances create in retirement. Large pre-tax balances trigger required minimum distributions beginning at age 73, and those RMDs count as ordinary income. Above certain thresholds, that income can cause up to 85% of Social Security benefits to become taxable and push modified adjusted gross income above the IRMAA thresholds that trigger Medicare Part B surcharges.

In 2026, IRMAA surcharges begin at $109,000 MAGI for single filers and $218,000 for married filing jointly. The Part B surcharges range from $81 to $487 per month, with intermediate tiers at $202.90 and $324.60 depending on income. A retiree who crosses even the first IRMAA tier faces an additional $81 per month in Medicare premiums, on top of any Social Security taxation triggered by the same income. Roth distributions are not included in MAGI for IRMAA purposes, so building Roth balances now can reduce Medicare costs a decade from now.

Workers who expect their retirement tax rate to exceed their current rate because of pension income, large pre-tax 401(k) balances that generate RMDs, or a high Social Security benefit generally benefit from forced Roth treatment. Workers expecting lower rates in retirement are paying taxes earlier on money they would have preferred to defer. The rule does not distinguish between the two situations.

Plans that lack a Roth option may suspend catch-up contributions entirely

Plan administrators must enforce the Roth catch-up requirement, and plans that are not yet compliant may suspend catch-up contributions entirely for affected employees while they update their systems. If your employer’s plan has not yet added a Roth 401(k) option, the plan cannot route your catch-up into a Roth account, and under the final regulations, you cannot make catch-up contributions at all until the plan is updated. A 58-year-old earning above the threshold at a non-compliant employer loses access to the full $8,000 catch-up for as long as the plan remains out of compliance.

Three things to check now

1. Pull your 2025 W-2 and confirm whether your FICA wages from your current employer exceeded $150,000. If they did, your 2026 catch-up contributions are subject to mandatory Roth treatment regardless of your current salary.
2. Confirm with your HR or benefits administrator that your plan has added a designated Roth account option and updated its payroll system to route catch-up contributions correctly. If the plan has not done so, ask when compliance is expected and whether contributions are suspended in the interim.
3. If your combined retirement income (RMDs, Social Security, pension) is likely to push your MAGI above $109,000 single or $218,000 married filing jointly in retirement, the forced Roth catch-up is working in your favor. If your projected retirement income sits well below those thresholds, the upfront tax cost of Roth treatment may not pay off, and that analysis may be worth reviewing with a fee-only advisor.