Beginning in 2026, if a participant earns more than $145,000* in FICA wages in the prior calendar year, all age 50-plus catch-up contributions, also known as “super catch-up contributions,” must be made to a Roth account in after-tax dollars.
For 2025, the catch-up contribution is an extra $7,500 on top of the standard $23,500 limit, for a total limit of $31,000. For those age 60 to 63, the catch-up limit jumps from $7,500 to $11,250. Starting in 2026, though, savers over the age of 50 will be divided into two groups based on annual income:
- Those making $145,000 or less in FICA wages in the prior year can continue making catch-up employee contributions to their regular pre-tax 401(k)/403(b) plans.
- Those making more than $145,000 (indexed) in the prior year will have their catch-up dollars directed to a Roth 401(k)/403(b)—which means those contributions will be after-tax, though their qualified withdrawals in retirement will be tax-free.
How does it work?
The $145,000 threshold amount is scheduled to be indexed annually for inflation, in $5,000 increments.
The threshold amount is based on wages paid by the employer sponsoring the plan during the preceding calendar year. This means employees hired in the current year will not have any wages with the current employer and therefore will not be subject to the Roth catch-up mandate. Similarly, employees hired later in the year may not exceed the threshold until the second year following their date of hire, if partial year wages are below the threshold.
How is “age” determined?
401(k)/403(b) catch-up age eligibility is always based on the last day of the calendar year (December 31), for both regular (age 50) and special (age 60-63) catch-up contributions.
How does the Roth catch-up mandate impact a plan if it doesn’t have a Roth contribution feature beginning January 1, 2026?
According to the SECURE Act 2.0, a plan may elect not to add a Roth contribution feature. In this instance, an eligible catch-up age employee subject to the Roth catch-up mandate is not permitted to make any catch-up contributions to the plan. Those employees not subject to the Roth mandate can continue to make pre-tax catch-up contributions. However, we expect that most plans will add a Roth contribution feature because the majority of participants making catch-up contributions earn more than the threshold amount.
*Indexed annually for inflation