New for 2026: High Earners Must Make 401(k) Catch-Up Contributions on a Roth Basis

Starting in 2026, a SECURE 2.0 rule changes how catch-up contributions work for higher earners. If you're 50 or older and your 2025 wages from your employer topped $150,000, any 401(k) catch-up contributions you make this year, once you hit the standard deferral limit, have to go into a Roth account instead of pre-tax. This isn't optional, and it isn't something your payroll system can quietly skip.

The threshold itself is indexed for inflation. The original SECURE 2.0 statute set it at $145,000 measured against 2024 wages; for 2026 it's risen to $150,000, measured against 2025 wages, and it will keep adjusting each year.

The 2026 numbers: the regular 401(k) elective deferral limit is $24,500. The standard catch-up for anyone 50 and older is an additional $8,000, for a combined $32,500. If you turn 60, 61, 62, or 63 sometime in 2026, your catch-up limit is higher, $11,250, for a combined $35,750.

Here's what it looks like in practice: say you're 55, earned $160,000 in wages from your employer in 2025, and you're making pre-tax 401(k) contributions in 2026. Once your contributions for the year hit $24,500, any further elective deferrals that count as catch-up must be Roth. You can't choose to keep that portion pre-tax, and your plan is required to route it correctly once you cross the line.

What this means for you: you lose the upfront tax deduction on the catch-up portion of your contribution, since Roth contributions are made with after-tax dollars. In exchange, that money grows tax-free and comes out tax-free in retirement, including the earnings, which is a real trade worth planning around rather than something to be surprised by on your W-2 next January. Depending on your bracket and how close you are to retirement, it can shift how you think about how much to defer overall this year.

If you sponsor a retirement plan for employees, the responsibility runs the other way: check with your payroll and recordkeeping provider now to confirm they're correctly identifying which employees crossed the $150,000 threshold and automatically routing their catch-up contributions to the Roth source once the regular limit is hit.

Contact Abell & Advisors if you want to talk through what this means for your specific situation, whether you're the one contributing or the one sponsoring the plan.