Beginning in 2026, an important change under the SECURE 2.0 Act will affect how certain workers age 50 and older make catch-up contributions to their 401(k) plans.

If you are a high earner, your catch-up contributions may be required to go into a Roth account instead of being made pre-tax. Below is a clear breakdown of what’s changing, who it affects, and how contribution limits work at different ages.

The Core Rule

Starting January 1, 2026:

If you are age 50 or older and your prior-year W-2 Box 1 wages from that employer exceed the IRS threshold, all of your 401(k) catch-up contributions for that year must be made as Roth (after-tax) contributions.

If your prior-year W-2 wages are at or below the threshold, you may continue choosing pre-tax or Roth for your catch-up contributions (depending on what your plan allows).

What Is the High-Earner Threshold for 2026?

For 2026, the look-back year is 2025. The statutory threshold is $145,000 (indexed), and the IRS has applied a $150,000 threshold for recent years.

For 2026 planning purposes:
A “highly paid” individual for this rule is someone who had more than $150,000 in W-2 Box 1 wages from that specific employer in 2025.

Important notes:
- The test is based only on W-2 Box 1 wages from that employer.
- It does not include investment income, rental income, or income from other employers.
- This definition is specific to the SECURE 2.0 Roth catch-up rule and is different from other Highly Compensated Employee definitions used in retirement plan testing.

Example Contribution Limits (Illustrative)

For illustration purposes, assume the following limits:
- Basic elective deferral limit: $24,500
- Age 50+ catch-up: $8,000
- Ages 60–63 super catch-up: $11,250

Under Age 50

When under age 50, the Roth catch-up rule does not apply. The maximum employee contribution would be $24,500, which can be pre-tax, Roth, or a combination.

Ages 50–59

Maximum contribution:
$24,500 basic deferral
+ $8,000 catch-up
= $32,500 total

If prior-year wages are $150,000 or less:
You may allocate both the basic deferral and catch-up as pre-tax, Roth, or any combination.

If prior-year wages exceed $150,000:
The $24,500 basic deferral may still be pre-tax, Roth, or split.
However, the entire $8,000 catch-up must be Roth.

Ages 60–63 (Super Catch-Up Years)

Maximum contribution:
$24,500 basic deferral
+ $11,250 super catch-up
= $35,750 total

If prior-year wages are $150,000 or less:
Both the basic and super catch-up amounts may be pre-tax, Roth, or mixed.

If prior-year wages exceed $150,000:
The $24,500 basic deferral remains flexible.
The full $11,250 catch-up must be Roth.

Age 64 and Beyond

Beginning at age 64, the super catch-up no longer applies. The standard age-50+ catch-up limit resumes.

Whether catch-up contributions must be Roth will continue to depend on the prior-year W-2 wages from that employer.

Key Takeaways

1. The 2026 high-earner test is based on 2025 W-2 Box 1 wages from that employer.
2. If prior-year wages exceed $150,000 (as indexed), catch-up contributions must be Roth.
3. The rule affects only catch-up contributions — not the regular elective deferral limit.
4. Planning ahead is critical, particularly for executives and professionals with higher earnings who rely on pre-tax catch-up contributions for tax management.

As IRS limits are adjusted annually for inflation, contribution amounts and thresholds should be confirmed each year. If you expect your compensation to exceed the threshold, it may be wise to proactively review your tax strategy and retirement contribution structure well before year-end.

Secure Today. Ready for Tomorrow.

At Echo Wealth Management, we believe thoughtful planning today creates confidence for tomorrow. Changes like the new Roth catch-up rules are not just technical updates — they are planning opportunities.

Whether you are approaching age 50, navigating peak earning years, or preparing for retirement, our team takes a holistic approach to align your retirement contributions, tax strategy, estate planning, and long-term goals into one coordinated plan.

If you would like personalized guidance on how these new rules may impact your financial strategy, we invite you to schedule a complimentary discovery call with one of our Associate Wealth Managers.

This conversation is an opportunity to discuss your goals, evaluate your current strategy,
and determine whether a more coordinated, forward-looking plan could help you feel secure today and ready for tomorrow.