The ‘Rothification’ of Catch-Up Contributions

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Starting in 2026, employer plan catch-up contributions are getting a new twist, at least for high earners. Once you hit the income threshold, catch-up contributions are required to be in your employer plan Roth account (i.e., 401(k), 403(b), 457 or TSP).

CATCH-UP CONTRIBUTIONS: A QUICK REFRESHER

Catch-up contributions are extra amounts that workers age 50 and older can add to their retirement plans, on top of the standard annual limits. They’re designed to help people boost their savings as retirement gets closer.

For 2026, here are the numbers we’re talking about:

• Elective deferral limit: $24,500. This standard annual contribution limit applies to people under age 50. If you’re 50+, this amount can still be pretax contributions no matter your income.
• Catch-up contribution limit (age 50+): an additional $8,000. This is the amount that will have to be Roth if you hit the income limit.
• Super catch-up (age 60-63): an additional $3,250 over regular catch-up contributions (for a total of $11,250). This newer type of catch-up contribution is a great opportunity to save even more right before retirement. As with normal catch-up contributions, they’ll have to be Roth if you hit the limit.

WHAT’S NEW

Starting in 2026, if your wages from your employer were more than $150,000 in the prior year, you’ll be required to make catch-up contributions as Roth, not pretax. (The income threshold will be indexed for inflation in future years.)

Here’s what that means:

• If you’re 50+ and earned more than $150,000 in 2025, your 2026 catch-up contributions must be Roth. (Once again, it’s the previous year’s income that makes the determination.) Note: Only wages from the sponsoring employer count. Spousal income, side jobs and investment income don’t apply.
• If your employer’s plan doesn’t offer Roth contributions, you may not be able to make catch-up contributions at all unless the plan is updated.
• This rule applies to 401(k), 403(b) and governmental 457(b) plans.
• If your wages are below the threshold, you can still make pretax catch-up contributions, but it’s important to monitor your earnings.

WHAT IT MEANS FOR YOUR TAXES

For high-income earners, this change could increase your taxable income in the short term. That’s because Roth contributions are made with after-tax dollars, so you lose the upfront deduction.

But there’s a silver lining: tax-free growth and withdrawals in retirement (assuming you meet Roth rules).

Whether this is a good deal depends on:

• Your current tax bracket
• Your expected future tax rate
• Your retirement timeline
• Other sources of retirement income

PLANNING TIPS FOR HIGH-INCOME WORKERS

If you’re affected, here’s what to consider:

• Review your 2025 income projections. If you’ll hit the limit, your 2026 Adjusted Gross Income may increase, which could impact other tax items (like deductions or credits). Consider charitable giving or other strategies to offset taxable income.
• Compare the tax impact of Roth versus additional savings in a taxable account. Roth contributions could be a smart move if you expect to be in a higher tax bracket later.
• Check your employer’s retirement plan features – do they include Roth? If not, ask about plan updates.
• Talk to a financial advisor and a tax professional to tailor your approach.

The “Rothification” of catch-up contributions is a big shift, but it’s also an opportunity. With the right planning, you may be able to turn this change into a long-term advantage.