The Roth Catch-Up Requirement
Catch-up contributions were the one part of a 401(k) that got better with age and stayed deductible. From 2026 that changes for higher earners: if your prior-year wages with the plan sponsor exceeded the threshold, your catch-up must be made on a Roth basis. The money still goes in — the deduction does not.
- Who it applies to:: Participants whose prior-year wages with the plan sponsor exceeded $150,000 for 2026.
- What changes:: The catch-up portion must be Roth. Regular deferrals up to the standard limit are unaffected.
- Prior year, one employer:: The test looks at wages from the plan sponsor in the preceding year, not at total household income.
- If the plan has no Roth option:: Catch-up contributions may not be available at all under that plan.
Where the AI summary above gets this wrong
"Catch-up contributions reduce your taxable income in the year you make them."
That's surface-true. Here's what it misses:
- For higher earners that is no longer true — From 2026 the catch-up has to be Roth if prior-year wages with the plan sponsor exceeded the threshold. The deduction people were counting on in their highest earning years is gone, and the cash flow effect is real — the same contribution now costs the marginal rate in tax.
- The test is on wages from one employer, not total income — It looks at wages from the plan sponsor in the prior year. Someone with a large investment income but modest wages may fall below it; someone who changed jobs may have no prior-year wages with the new sponsor at all. Household income is not the measure.
- No Roth option in the plan can mean no catch-up — The requirement only makes sense where the plan offers designated Roth contributions. Where it does not, an affected participant may be unable to make catch-up contributions under that plan, which is a reason to ask the plan administrator what the plan actually offers rather than assuming.
01 What the rule says
Beginning in 2026, a participant in a plan with Roth features who had prior-year wages with the plan sponsor above $150,000 must make any catch-up contribution on a Roth basis. The contribution is included in income for the year, and the money and its growth come out tax-free later.
Only the catch-up portion is affected. Elective deferrals up to the standard limit can still be made pre-tax if the participant chooses. The catch-up allowance itself is unchanged in size, including the higher limit available at ages 60 to 63.
The threshold figure is indexed, so it will move. The mechanism will not: it is a look-back at what one employer paid you in the previous calendar year.
02 Who is caught and who is not
The measure is wages from the plan sponsor in the preceding year. That has three consequences worth checking against your own situation.
Self-employed people with no wages, and participants whose income is largely from investments rather than employment, may fall outside it entirely. Someone who joined a new employer partway through the previous year may have prior-year wages below the threshold with that sponsor even on a high salary. And a household well above the figure in total may have neither individual above it.
Where a plan does not offer designated Roth contributions at all, the requirement cannot be satisfied, and catch-up contributions may simply be unavailable to affected participants under that plan. The plan administrator is the only reliable source on what your plan does.
03 Whether it is actually bad news
The cash flow effect is unwelcome and the long-run effect is arguable. A Roth catch-up made at 60 has perhaps twenty-five years of tax-free growth ahead of it and produces no required distributions, which for someone with a large pre-tax balance is a genuine improvement.
The case against is straightforward: a higher earner in their final working years is frequently at their lifetime peak marginal rate, and paying tax at that rate to avoid a lower rate later is a poor trade. That is the same arithmetic as the Roth versus traditional decision, with the choice removed.
Since the choice is removed, the useful response is to adjust elsewhere. The catch-up now builds tax-free money, so the case for additional Roth conversions in later low-income years weakens, and the balance of the plan should shift accordingly rather than being left as it was.
Shows: the difference between paying tax now on a catch-up you must make as Roth and paying it later on the traditional contribution you would otherwise have made, comparing the two rates you enter. Ignores: the tax-free growth a Roth contribution then produces, which works the other way, state tax, and any change in the law before you retire.
Source: FAQs on designated Roth accounts
The people this hits are in their sixties, at their peak earnings, and have spent twenty years being told the catch-up is a deduction. It is worth saying plainly that nothing has been taken away except the deduction — the contribution room is the same, and the money ends up in an account that will never produce a required distribution. What I would actually change is the rest of the plan: if the catch-up is now building Roth money automatically, the conversions you were planning for your early retirement years may be doing work that is already done.
FAQ
Who has to make Roth catch-up contributions?
From 2026, participants in plans with Roth features whose prior-year wages with the plan sponsor exceeded $150,000. The test is on wages from that employer in the preceding year, not on total household income.
Does this affect my regular 401(k) contributions?
No. Only the catch-up portion is affected. Elective deferrals up to the standard limit can still be made on a pre-tax basis.
What if my plan does not offer a Roth option?
The requirement cannot be met, and catch-up contributions may not be available to affected participants under that plan. Ask the plan administrator what the plan offers.
Sources
Regulator references
- Retirement topics: catch-up contributions · Internal Revenue Service · 2026The Roth catch-up requirement from 2026 and the prior-year wage threshold that triggers it.Last verified: 2026-09-07
- Roth accounts in your retirement plan · Internal Revenue Service · 2026Whether a plan offers a designated Roth account at all, which decides what happens next.Last verified: 2026-09-07
- FAQs on designated Roth accounts · Internal Revenue Service · 2026How a designated Roth contribution is treated and the clock it starts.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.