New 2026 Rules for Catch-Up Contributions: What They Mean for Your Retirement

By David Bornhorst

If you’re age 50 or older, catch-up contributions are one of the best tools you have to boost your retirement savings in your peak earning years. But starting in 2026, the rules for those extra contributions are changing in an important way, especially if you’re a higher earner.

Here’s a clear overview of what’s coming and what you should do now to prepare.

What are catch-up contributions?

Once you turn 50, the IRS lets you contribute more to your workplace retirement plan (like a 401(k), 403(b), or 457(b)) than younger employees. These extra dollars are called catch-up contributions and they’re designed to help you “catch up” if you started saving later or simply want to put more away.

Up to now, many people have chosen to make their catch-up contributions on a pre-tax basis, which reduces taxable income today and creates taxable income later in retirement.

What changes in 2026?

The SECURE 2.0 Act changes how catch-up contributions work for higher-earning employees.

Beginning with plan years starting on or after January 1, 2026, if you are age 50 or older and your prior-year wages from this employer exceed $145,000, measured using FICA wages (Social Security wages – Box 3 on your W-2), then all of your catch-up contributions must be made as Roth (after-tax) contributions.

This distinction is important: The $145,000 threshold is based on FICA wages – not federal taxable wages (Box 1). That means your pre-tax 401(k) contributions do not reduce the compensation used to determine whether you cross the limit. This prevents someone from lowering their Box 1 wages below the threshold by contributing pre-tax and thereby qualifying for pre-tax catch-up contributions. The rule is tied strictly to Box 3 FICA wages.

If your FICA wages are at or below $145,000, you can still choose between pre-tax and Roth catch-up contributions, as long as your plan offers both.

There’s another important detail: if a plan doesn’t offer Roth contributions at all, then higher-earning participants who cross the $145,000 threshold won’t be allowed to make catch-up contributions unless the plan is updated to include a Roth option.

The new “super” catch-up rules

Beginning in 2025, SECURE 2.0 introduced an enhanced catch-up (often called the “super” catch-up) for individuals ages 60-63.

• For 2025, eligible participants can contribute an additional $3,750 on top of the standard catch-up limit.
• In 2025 only, this super catch-up can still be made as traditional (pre-tax) contributions if the plan allows.

However, starting in 2026, the Roth requirement applies here too:

• For 2026, the super catch-up amount increases to $3,250.
• All catch-up contributions for higher earners, including the “super” catch-up amounts, must be made as Roth (post-tax) if FICA wages exceed the $145,000 threshold (indexed for inflation).
  

In other words, in 2025 you may still have flexibility, but once the calendar turns to 2026, both catch-up and super catch-up dollars must follow the same Roth-only rule if you’re over the income limit.

How our plan will handle your catch-up contributions

To keep you compliant with the new rules and avoid blocking you from saving more, our plan will use a “default Roth” treatment for certain participants.

Starting January 1, 2026, if you’re 50 or older and your prior-year FICA wages from this employer are above the wage limit, any catch-up contributions you elect will automatically be treated as Roth contributions.

That means:

• Your catch-up dollars will be taken after tax from your paycheck.
• Those contributions will go into the Roth portion of your retirement account. If you meet the usual requirements (for example, generally being at least 59½ and having had a Roth account for at least five years), your withdrawals of those Roth contributions and their earnings can be tax-free in retirement.
  

Your regular contributions up to the standard annual limit can still be pre-tax, Roth, or a mix, depending on what the plan allows and what you choose. The Roth-only rule applies specifically to catch-up contributions for higher earners (and super catch-up contributions once eligible).

Can you opt out?

You will have the ability to opt out of having your catch-up contributions treated as Roth. However, under the design of this plan, opting out comes with a trade-off. If you opt out of Roth treatment for catch-up contributions, you will not be able to make any catch-up contributions at all for that year.

You can still contribute up to the regular annual limit, but you’ll lose the ability to put in the extra “catch-up” amount.

What this means for your paycheck and your taxes

If you’re a higher earner who has been making pre-tax catch-up contributions, you may notice two things once these rules take effect:

1. Your take-home pay may go down slightly, because those catch-up dollars will now be after-tax Roth contributions instead of pre-tax.
2. You’ll be building a growing pool of potentially tax-free money in retirement, which can provide more flexibility with your tax situation later in life.
   

In other words, the government is shifting some higher earners from “tax break now, pay tax later” to “pay tax now, potential tax break later.” Whether that’s a good trade for you depends on your overall financial and tax picture.

Checklist: What to Do Before 2026

Here’s your to-do list before the new year begins:

• Check your plan. Does it currently allow Roth contributions?
• Confirm payroll reporting. Ensure you understand how FICA wages (Box 3) determine eligibility.
• Talk to your provider. If your plan doesn’t offer Roth now, can it be added before January 2026?
• Communicate clearly. Let employees know what’s changing and who it affects – including super catch-up rules for ages 60-63.
• Update your payroll system. Mark “Do not participate” if needed under the plan design.

Why This Matters for You

Understanding these changes now will help you avoid surprises and keep your retirement savings on track. If you’d like help evaluating your options or updating your contribution elections, please reach out. I’m happy to walk you through your specific situation and customize a plan that fits the retirement you’re aiming for.