The Rule
SECURE 2.0 flipped catch-up contributions for high earners. Starting 2026, anyone aged 50+ whose prior-year FICA wages (Box 3 on your W-2) exceeded $150,000 can only make catch-up contributions to 401(k), 403(b), or 457(b) plans on an after-tax Roth basis. Pretax catch-ups are gone for this cohort.
The threshold is $150,000 for 2025 wages (determining 2026 eligibility), indexed in $5,000 increments. Standard contributions remain elective (pretax or Roth). This only affects the $8,000 catch-up for most, or $11,250 for those aged 60-63.
What Changed
IRS Notice 2025-67 confirmed the wage threshold after a three-year delay. The original 2024 start date was postponed because SECURE 2.0 accidentally eliminated the catch-up exclusion from gross income entirely. That's been fixed. Now it's real.
Total 2026 limits: $24,500 standard deferral, plus $8,000 catch-up (50+), or $11,250 enhanced catch-up (ages 60-63). High earners hit $32,500 or $35,750 total, but the catch-up portion is mandatory Roth.
The CFO Problem
If your plan doesn't offer designated Roth accounts, high-earning employees lose catch-up access entirely. You'll need to amend the plan document before year-end and update payroll systems to enforce the split (standard pretax/Roth choice, catch-up Roth-only).
Take-home pay drops for affected staff. Roth contributions don't reduce taxable wages. Notify participants now. University systems and large employers are already pushing alerts.
Partners and self-employed are exempt (no W-2). The threshold is wages from the sponsoring employer only, not household income.
Compliance Steps
- Identify 2025 high earners (FICA wages over $150,000)
- Confirm plan offers Roth catch-ups (or add it)
- Update payroll to block pretax catch-ups for this group
- Communicate the change (reduced take-home, qualified distribution rules)
- Amend plan documents to reflect mandatory Roth treatment
Roth IRA catch-ups remain separate ($8,600 total for 2026, income limits apply). This is employer plan-specific.
The deemed Roth election is automatic. No participant opt-out. High earners either go Roth or forfeit the catch-up.