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

"Under Section 603 of SECURE 2.0, workers who earned more than $145,000 in the prior year can no longer make pre-tax catch-up contributions to their 401(k). These contributions must be designated Roth, marking the biggest structural change to catch-up contributions since their introduction in 2001."

"The threshold is based on last year's W-2, meaning that if your W-2 wages from the sponsoring employer exceeded $150,000 in 2025, your catch-up contributions in 2026 must go into a Roth account. This rule looks backward, impacting workers based on prior earnings."

"For 2026, the base 401(k) deferral limit is $24,500, with workers aged 50 and older able to add a catch-up contribution of $8,000. Those aged 60 through 63 qualify for a 'super catch-up' of $11,250, but all catch-up contributions for high earners must be Roth."

"Roth contributions do not reduce taxable income in the year they are made. For a worker in the 24% tax bracket, an $8,000 Roth catch-up increases current-year taxes compared to a pre-tax contribution, affecting financial planning for high earners."

Beginning January 1, 2026, workers earning over $145,000 in the previous year will be required to make catch-up contributions to their 401(k) plans as Roth contributions. This change, mandated by Section 603 of SECURE 2.0, is the first major alteration to catch-up contributions since 2001. The threshold is based on the prior year's W-2 income, meaning a worker with a high income in 2025 may still be subject to Roth contributions in 2026, regardless of a lower income that year. The 2026 base deferral limit is $24,500, with additional catch-up options for older workers.

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