Starting January 1, 2026, a new SECURE 2.0 rule quietly changed how millions of higher-earning savers put money into their 401(k), 403(b), or governmental 457(b) plan. If you're 50 or older and your prior-year wages from your employer topped $150,000, any catch-up contribution you make this year has to go in as Roth - after-tax - instead of pre-tax. The IRS set that threshold in Notice 2025-67, raising it from an earlier proposed $145,000, and confirmed the 2026 contribution limits alongside it: a $24,500 base deferral limit, an $8,000 catch-up for savers 50 and up, and an enhanced $11,250 "super catch-up" for those aged 60 to 63.
The rule itself wasn't delayed - only the IRS's final regulations were, pushed to take full legal effect on January 1, 2027, which means 2026 is being treated as a good-faith transition year. That's a narrow, useful window: payroll systems are still adjusting, mistakes are common, and you have a few weeks left before December 31 to catch any misclassified contribution before it becomes a bigger headache at tax time. This guide walks through who's affected, how to check your own numbers, what happens if your plan isn't ready, and how savers outside the US should think about the broader lesson here.
Key Numbers to Know
These figures come directly from IRS Notice 2025-67, released November 13, 2025, and the final Roth catch-up regulations issued by Treasury and the IRS in September 2025.
| Limit or Threshold | 2025 | 2026 |
|---|---|---|
| 401(k)/403(b)/457(b) base deferral limit | $23,500 | $24,500 |
| Catch-up contribution (age 50+) | $7,500 | $8,000 |
| Super catch-up (ages 60-63) | $11,250 | $11,250 (unchanged) |
| IRA contribution limit | $7,000 | $7,500 |
| IRA catch-up (age 50+) | $1,000 | $1,100 |
| Mandatory Roth catch-up wage threshold | n/a (not yet in effect) | $150,000 in prior-year wages |
Put plainly: a 55-year-old who earned $160,000 in FICA wages last year and wants to max out their 401(k) in 2026 can still contribute the full $32,500 ($24,500 plus $8,000 catch-up) - but that $8,000 must now sit in a Roth account, taxed on the way in rather than on the way out. Someone earning $140,000 last year isn't touched by the rule at all and can still choose pre-tax catch-up contributions as before.
Who This Rule Actually Affects
The threshold looks straightforward but trips people up because it's based on last year's wages from one specific employer, not this year's income and not combined household income. Before you assume you're in the clear - or that you're caught by it - check these specifics:
- It's prior-year wages, not current. Your 2026 catch-up classification is based on your 2025 FICA (Social Security/Medicare) wages from the employer sponsoring the plan - specifically the amount in Box 3 or Box 5 of your W-2, not your gross salary or Box 1 taxable wages.
- It's per-employer, not per-person. If you switched jobs mid-year, only wages from the employer whose plan you're contributing to count. Someone who earned $200,000 at a prior job but just $90,000 at a new employer since joining in June generally isn't captured by that new plan's Roth mandate for 2026.
- It only applies to catch-up contributions. Your regular (non-catch-up) deferrals, up to $24,500 in 2026, are untouched - you can still make those pre-tax regardless of income.
- You must be 50 or older in the plan year. Younger savers aren't eligible for catch-up contributions at all, so the rule is moot for them.
- Self-employed people and owner-only plans can be affected too if their plan documents define compensation in a way that crosses the threshold - solo 401(k) holders should check with their plan provider directly.
Step-by-Step: How to Check and Act Before Year-End
You don't need a CPA to figure out where you stand. Walk through this in the next few days, while there's still time to fix anything before contributions for the year are locked in.
- Pull your 2025 W-2 and look at Box 5 (Medicare wages), which is the figure most plans use as the wage test, though some use Box 3 Social Security wages instead - check your plan's summary plan description if you're near the line.
- Compare that number to $150,000. If you're meaningfully under it, you're not subject to the mandate this year and can keep making pre-tax catch-up contributions if you prefer.
- Log into your 401(k) or 403(b) provider's portal and check how your current catch-up contributions are being coded - look for a line item distinguishing "Roth catch-up" from "pre-tax catch-up," or ask HR/payroll directly if it isn't obvious.
- If you're over the threshold and your contributions are still coded pre-tax, contact your plan administrator now. Many plans are using automatic "deemed" Roth elections for affected employees, but not all have this set up correctly yet, especially at smaller employers.
- Confirm your plan actually offers a Roth option. If it doesn't, read the next section before you assume you can keep contributing the catch-up amount at all.
- Re-run your tax withholding estimate if a chunk of your catch-up contributions just became after-tax instead of pre-tax - that shifts your taxable income up for 2026, which can matter for your marginal bracket, so adjust your withholding or estimated payments if needed.
What Happens If Your Plan Has No Roth Option
This is the part that catches people off guard. Under the final regulations, a 401(k), 403(b), or governmental 457(b) plan that doesn't offer a designated Roth account cannot let affected high earners make any catch-up contributions in 2026 - pre-tax or Roth. The catch-up opportunity simply disappears for them until the employer amends the plan to add a Roth feature.
Practical note: If your employer sponsors a smaller or older plan that never added a Roth option, don't assume it's been fixed. Ask HR in writing whether the plan has added Roth deferrals for 2026, and if not, ask for the timeline. Many mid-size employers scrambled to amend plan documents through 2025 specifically to avoid locking out their higher-paid, longer-tenured employees from catch-up savings.
If your plan genuinely can't offer catch-up contributions this year, your workaround is limited: you can still max out the regular $24,500 deferral limit, and you can direct extra savings into an IRA (subject to its own $7,500 limit plus $1,100 catch-up, though IRA Roth contributions phase out at higher incomes) or a taxable brokerage account instead.
How International Savers Should Read This
This specific rule is a US tax-code mechanic, tied to the US payroll tax system, so it doesn't transfer directly to the UK, Canada, Australia, or New Zealand. But the underlying pattern - governments tightening the tax treatment of retirement contributions for higher earners - shows up in every one of these systems, just through different levers. It's worth knowing your own country's version so you're not caught flat-footed the way some US savers have been this year.
| Country | Mechanism Aimed at Higher Earners | What It Does |
|---|---|---|
| United States | Mandatory Roth catch-up ($150,000 wage threshold) | Forces after-tax treatment of catch-up contributions above the threshold |
| United Kingdom | Tapered annual allowance | Shrinks the amount of pension contributions eligible for tax relief as adjusted income rises above £260,000, down to a £10,000 floor |
| Canada | RRSP contribution room based on earned income | Caps deductible RRSP contributions at 18% of prior-year earned income, up to an annual dollar maximum, regardless of how high income climbs |
| Australia | Division 293 tax | Adds an extra 15% tax on concessional (before-tax) super contributions for people with income plus contributions above A$250,000 |
The common thread: every Tier 1 country eventually claws back some of the upfront tax advantage of retirement saving once income crosses a certain line. If you're in the UK and anywhere near the tapered allowance zone, or in Australia and close to the Division 293 threshold, treat this US story as your cue to check your own country's equivalent rule with a tax adviser before your contribution year closes, rather than assuming it only matters for American readers.
Common Mistakes to Avoid
- Assuming "high earner" means your current salary. The test runs on last year's wages from this specific employer - a recent raise or a recent pay cut can both change your status unexpectedly.
- Leaving catch-up contributions miscoded until year-end. A pre-tax catch-up contribution made in error by someone over the threshold generally has to be corrected - typically by recharacterizing the contribution or distributing the excess - and that correction gets more complicated the longer it sits uncorrected.
- Not checking whether your plan offers Roth at all. Some savers keep contributing past the catch-up limit assuming it's automatically allowed, only to find out later their plan was never authorized to accept it from them.
- Ignoring the tax-withholding impact. Shifting catch-up dollars from pre-tax to Roth raises your current taxable income; if you don't adjust withholding, you can end up owing more than expected in April.
- Forgetting the age-60-63 super catch-up still applies on top. If you're in that age band, the $11,250 figure, not the standard $8,000, is your ceiling - and the Roth mandate applies the same way if you're over the wage threshold.
Practical Tips for the Rest of 2026
- Set a calendar reminder for early December to do one final paycheck check - confirm your total catch-up contributions for the year are tracking toward the $8,000 (or $11,250) limit and are coded the way you expect.
- If you're near the $150,000 wage line, ask payroll which wage figure (Box 3 vs. Box 5) your specific plan uses - it can change your answer by a few thousand dollars either way.
- If part of your catch-up is now mandatorily Roth, consider whether to also voluntarily shift some of your non-catch-up deferrals to Roth for consistency, especially if you expect to be in a similar or higher tax bracket in retirement.
- If you're self-employed with a solo 401(k) and anywhere near the threshold, call your plan provider directly - the compensation definitions in owner-only plans vary and this isn't one to guess on.
- Outside the US, use this moment to pull your own country's current-year allowance or cap (tapered annual allowance, RRSP room, concessional cap) and confirm you're not quietly over it before your tax year closes.