When the clock strikes midnight tonight, a major change to retirement savings rules will take effect. Beginning January 1, 2026, the SECURE 2.0 Act's mandatory Roth catch-up provision kicks in, fundamentally altering how high-earning workers can boost their 401(k) savings.

If you're over 50 and earned more than $150,000 in FICA wages during 2025, your catch-up contributions to employer-sponsored retirement plans must now be made on a Roth (after-tax) basis. The traditional pre-tax option that's been available for decades is no longer permitted for those above the income threshold.

Understanding the New Rule

Catch-up contributions allow workers age 50 and older to save additional money beyond the standard 401(k) limits. For 2026, the regular catch-up limit is $8,000 (up from $7,500 in 2025), and workers ages 60 through 63 get an enhanced "super catch-up" limit of $11,250.

Previously, all workers could choose whether to make these catch-up contributions on a pre-tax or Roth basis. That choice disappears for high earners starting tomorrow.

The $150,000 Threshold

The income test looks at your Box 3 wages (Social Security wages) from the prior year's W-2. If that figure exceeded $150,000 in 2025, you're subject to the mandatory Roth requirement for 2026 catch-up contributions.

This threshold is indexed for inflation, so it will adjust in future years. The IRS increased it from the originally proposed $145,000 to $150,000 in November 2025.

What This Means for Your Retirement Savings

The shift from pre-tax to Roth contributions has significant implications:

Immediate Tax Impact

Roth contributions are made with after-tax dollars, meaning you pay taxes on the money now rather than in retirement. For a worker in the 32% federal tax bracket making the full $8,000 catch-up contribution, that's roughly $2,560 more in current-year federal taxes compared to a pre-tax contribution.

Long-Term Trade-Off

The flip side: Roth funds grow tax-free, and qualified withdrawals in retirement are completely tax-free. If you expect to be in a similar or higher tax bracket in retirement, Roth contributions can be advantageous. The money also isn't subject to required minimum distributions (RMDs) when it's in a Roth 401(k), providing more flexibility in retirement income planning.

Net Income Reduction

Workers who continue making the same dollar amount in catch-up contributions will see reduced take-home pay, since the tax benefit of pre-tax contributions is no longer available. Some may choose to reduce their catch-up amounts as a result.

What If Your Plan Doesn't Offer Roth?

Here's a critical detail that's caught many plan sponsors off guard: the mandatory Roth catch-up rule only allows high earners to make catch-up contributions if their plan offers a Roth option. Plans are not required to add Roth features.

If your employer's 401(k) plan doesn't offer Roth contributions, high-earning employees simply cannot make any catch-up contributions at all—not even pre-tax ones. This has created urgency for plan sponsors to add Roth features before the deadline.

Transition Period Flexibility

Recognizing the complexity of implementation, the IRS has provided some relief. While the law takes effect January 1, 2026, the final regulations don't become mandatory until January 1, 2027. During 2026, plan sponsors can apply a "reasonable, good-faith interpretation" of the rules.

This means some minor administrative issues during the transition year may be tolerated by regulators, but the core requirement—Roth-only catch-ups for high earners—remains in effect starting tomorrow.

Planning Strategies

Maximize Regular Contributions First

Remember that this rule only affects catch-up contributions. High earners can still make pre-tax contributions up to the regular $23,500 limit for 2026. Only the additional catch-up amount is subject to the Roth requirement.

Consider the Mega Backdoor Roth

If your plan allows after-tax contributions beyond the regular limits (separate from catch-up contributions), you may be able to convert these to Roth through what's known as the "mega backdoor Roth" strategy. This can be an effective way to boost Roth savings regardless of the new catch-up rules.

Evaluate Your Current Tax Situation

If you're a high earner who was previously making pre-tax catch-up contributions, consider whether this forced switch to Roth actually aligns with your retirement goals. For some workers, the new rule simply accelerates a shift to Roth that makes sense anyway.

The Bigger Picture

The mandatory Roth catch-up provision is part of Congress's broader effort to shift more retirement savings toward Roth accounts. Roth contributions generate tax revenue now rather than deferring it to the future, which helps fund government spending in the near term.

For high earners, this represents a loss of flexibility and increased current-year tax obligations. But it also forces a more disciplined approach to Roth savings that many financial advisors have long recommended.

As the new year begins, affected workers should review their contribution elections, verify their plan's Roth capabilities, and adjust their withholdings if necessary to account for the reduced tax benefits. Welcome to the new era of retirement savings for high earners.