This New 401(k) Rule Takes Effect in 2026. Will this change impact you?

Beginning in 2026, the SECURE 2.0 Act introduces an important change to how certain workers age 50 and older can make catch-up contributions to employer-sponsored retirement plans. For higher earners, these additional contributions will now be required to go into Roth accounts.

Understanding how this rule works—and whether it applies to you—can help you plan ahead and avoid surprises when the change takes effect.

How the Roth Catch-Up Requirement Works

Starting January 1, 2026, individuals who meet both of the following criteria will be impacted:

• Age 50 or older by December 31 of the contribution year, and

• Earned more than $150,000 in FICA wages in the prior year (as shown in Box 3 of your Form W-2)

If you meet these requirements, any catch-up contributions must be made on a Roth (after-tax) basis.

• You can still choose between pre-tax and Roth contributions for the regular deferral limit (up to $24,500 in 2026), but the catch-up portion must go to Roth.

• Workers who earned $150,000 or less in the prior year may continue making catch-up contributions to either pre-tax or Roth 401(k) accounts, depending on plan availability.

Important note: This rule applies only to employer-sponsored retirement plans, such as 401(k)s and 403(b)s. IRAs are not affected by the Roth catch-up requirement.

What to Do If You’re Impacted

If you’re approaching age 50 or already making catch-up contributions, planning ahead is key.

In early 2026:

1. Review Box 3 on your 2025 Form W-2 to confirm whether your FICA wages exceeded $150,000.

2. If they did, contact your retirement plan sponsor or provider to confirm how Roth catch-up contributions are handled under your plan.

3. Consider working with a financial advisor or tax professional to determine the most appropriate contribution strategy for your overall financial picture.

What If Your Plan Doesn’t Offer a Roth 401(k)?

While many employers now offer Roth 401(k) options, not all plans do. If your plan lacks this feature, you may still have alternatives:

Roth IRA Contributions

If your income is within IRS limits, you may be able to contribute directly to a Roth IRA.

• For 2025: total limit of $8,000 for those 50+

• For 2026: total limit increases to $8,600 (including the enhanced catch-up)

Roth Conversions (Including Backdoor Roth Strategies)

If your income exceeds Roth IRA limits, a Roth conversion may be an option. This involves contributing after-tax dollars to a traditional IRA and then converting those funds to a Roth IRA.

The Bottom Line

SECURE 2.0 adds new rules—but also new planning opportunities—for investors age 50 and older. As contribution limits rise and Roth requirements expand, catch-up contributions remain a powerful tool for strengthening long-term retirement readiness.

Understanding how these changes affect your specific situation can help you stay compliant while making the most of available tax-advantaged strategies. Working with a financial professional can ensure your contributions align with both your retirement goals and your overall tax plan. See below for our contact information.

This content is for informational purposes only and should not be considered tax or legal advice. Consult a qualified tax professional regarding your specific situation.