Starting this year, the IRS closed a tax deferral door that high-earning workers over 50 had used for years. If you made more than $145,000 from your employer in 2025, your 401(k) catch-up contributions for 2026 must go into a Roth account — not a pre-tax one. That means no upfront tax deduction on those extra dollars.
The rule comes from the SECURE 2.0 Act, passed in late 2022. After two years of IRS delays and guidance, it took full effect January 1, 2026. The change affects anyone 50 or older who earned above the income threshold from the same employer — roughly one in three workers in that age bracket, by some estimates.
For savers who built their retirement strategy around maximizing pre-tax deferrals, this reshuffles the math. The upside: Roth money grows tax-free and has no required minimum distributions. The downside: you pay taxes on those contributions now, at your current marginal rate.
The $145,000 threshold is lower than it sounds. In many metro areas, that’s a mid-level manager or senior individual contributor. Teachers, nurses, government workers, and engineers in high cost-of-living cities can cross it without feeling particularly wealthy.
The test is employer-specific. If you earned $145,000-plus from your current employer last year, all your 2026 catch-up contributions at that employer must be Roth. If you switched jobs, your new employer looks at what you earned from them — not your total prior income. Multiple employers each apply the rule independently.
Pre-tax contributions reduce your taxable income now; Roth contributions don’t. For someone in the 32% or 37% bracket, that’s a real cost difference on $7,500 — anywhere from $2,400 to $2,775 in taxes paid today that they previously deferred. Whether the trade-off makes sense depends on where you expect marginal rates to land in retirement.
The case for Roth: rates could rise, and Roth accounts have no required minimum distributions, giving you more control over taxable income in retirement. For high earners who expect large Social Security benefits, pensions, or other taxable income in retirement, Roth is a genuine hedge against future rate risk.
Check whether your employer’s plan offers a Roth 401(k) option — not all do. If yours doesn’t and you’re affected, you cannot make catch-up contributions in 2026 until your plan is amended. Talk to your HR or benefits administrator to confirm your plan’s status.
If your plan does offer Roth, make sure your contribution elections are updated. Some plans auto-route catch-up contributions to the pre-tax account by default. You may need to actively re-designate them. Don’t assume the plan caught the change for you.
The threshold is “more than $145,000” in 2025, so $145,000 on the nose does not trigger the rule. The threshold is indexed for inflation and may shift year to year — confirm with your plan administrator.
Yes. The Roth catch-up requirement applies to 401(k), 403(b), and governmental 457(b) plans. SIMPLE IRAs are treated separately. If you’re in a 403(b) at a nonprofit or school, you’re subject to the same rule if your wages exceed the threshold.
High earners at this income level are typically phased out of direct Roth IRA contributions. A backdoor Roth IRA remains an option, but it’s a separate strategy and doesn’t substitute for workplace plan catch-up contributions.