The new year brings more than just higher contribution limits for retirement savers. A significant rule change embedded in the SECURE 2.0 Act is now in effect, fundamentally altering how high-earning workers can make catch-up contributions to their employer-sponsored retirement plans.

Starting in 2026, employees aged 50 and older who earned more than $150,000 in W-2 wages from their employer in the prior year must direct all catch-up contributions to designated Roth accounts. The option to make pre-tax catch-up contributions has been eliminated for this group.

Understanding the New Rule

The mandatory Roth catch-up provision applies to 401(k), 403(b), and governmental 457(b) plans. Here's how it works:

  • Income threshold: If your W-2 Social Security wages from a single employer exceeded $150,000 in 2025, you're affected
  • Contribution type: All catch-up contributions must be Roth—made with after-tax dollars but growing tax-free
  • Regular contributions unaffected: Your standard contribution up to the base limit ($24,500 for 2026) can still be pre-tax or Roth at your election
  • Per-employer calculation: The $150,000 threshold is determined separately for each employer if you work multiple jobs

For context, the 2026 catch-up contribution limit for workers aged 50 to 59 (and 64+) is $8,000. For those aged 60 to 63, the "super catch-up" provision allows contributions of up to $11,250. These are substantial sums that, under prior rules, could have been directed to pre-tax accounts for immediate tax deductions.

The Tax Impact

The shift from pre-tax to Roth catch-up contributions creates immediate tax consequences for affected workers:

Lost Upfront Deduction

An employee making the full $8,000 catch-up contribution at a 32% marginal federal rate will pay approximately $2,560 more in current-year federal taxes than under the old rules. Add state income taxes, and the immediate cost can exceed $3,000.

Future Tax-Free Growth

The trade-off is that Roth contributions and their earnings will never be taxed again. For workers expecting to remain in high tax brackets during retirement—or who believe tax rates will rise—the Roth structure may ultimately prove advantageous.

Required Minimum Distributions

Roth 401(k) accounts are now exempt from required minimum distributions during the account holder's lifetime (another SECURE 2.0 change), providing additional flexibility that pre-tax accounts don't offer.

"This rule is per employer. If you work for more than one employer, the $150,000 threshold is determined separately for each. You could be subject to the mandatory Roth requirement at one job but not another."

— IRS guidance on catch-up contribution rules

What You Should Do Now

If you're affected by the new rule, several action items deserve attention:

Check Your Plan's Roth Option

Not all employer plans offer designated Roth accounts. If your plan lacks this feature, you may be unable to make catch-up contributions at all in 2026. Contact your HR department or plan administrator immediately to confirm availability.

Update Your Elections

If you've been making pre-tax catch-up contributions automatically, your elections need to be updated. Failure to redirect to Roth could result in excess contribution penalties.

Revisit Your Tax Projections

The additional current-year tax liability from mandatory Roth contributions may require adjusting your withholding or estimated tax payments. Consult a tax professional to avoid underpayment penalties.

Consider the Super Catch-Up

Workers aged 60 to 63 qualify for catch-up contributions of up to $11,250 in 2026—the highest in any age bracket. If you're in this window, maximizing contributions despite the Roth requirement could accelerate your retirement savings substantially.

The Broader 2026 Contribution Landscape

The mandatory Roth rule is one of several retirement contribution changes for 2026:

  • Base 401(k)/403(b)/457 limit: $24,500 (up from $23,500)
  • Standard catch-up (ages 50+): $8,000 (up from $7,500)
  • Super catch-up (ages 60-63): $11,250
  • IRA contribution limit: $7,500 (up from $7,000)
  • IRA catch-up (ages 50+): $1,100 (up from $1,000)

For a 62-year-old maximizing all available contributions, the total 401(k) contribution capacity is $35,750 ($24,500 base + $11,250 super catch-up)—a substantial wealth-building opportunity even with the Roth requirement.

The Long-Term View

While the mandatory Roth rule feels like a tax increase to affected workers, the long-term calculation is more nuanced. Roth accounts offer:

  • Tax-free qualified withdrawals: No income tax on distributions in retirement
  • No RMD requirements: Greater flexibility in retirement income planning
  • Estate planning benefits: Tax-free inheritance for beneficiaries (though subject to the 10-year distribution rule for most non-spouse beneficiaries)

For workers who expect tax rates to rise over time—whether due to personal income growth, policy changes, or the scheduled expiration of Tax Cuts and Jobs Act provisions after 2025—building Roth assets now may prove wise.

The mandatory Roth catch-up rule represents a significant shift in retirement planning for high earners. While it removes a choice that many valued, it also forces the accumulation of tax-advantaged assets that will provide flexibility for decades to come. Understanding the new landscape is the first step to optimizing your 2026 retirement strategy.