Beginning in 2026 401(k) participants who are age 50 or older and high earners will face new rules regarding how and if catch-up contributions can be made to their employer’s 401(k) plan.
Starting in 2026, plan participants with an income of $150,000 or higher in 2025 are required to make all catch-up contributions to their 401(k), 457 or 403(b) plans to a Roth option in the plan. In 2025 a new rule allowing for “super” catch-up contributions for participants ages 60 to 63 went in effect as well. Note this rule does not supersede the new Roth requirement.
It should be noted that the 401(k) contribution limits for 2026 are $24,500 with a catch-up limit of $8,000 for those ages 50 to 59 and over age 63. The “super” catch-up limit for participants ages 60 to 63 is $11,250 if their plan allows this.
Roth catch-up contributions
Beginning in 2026, those whose 2025 earnings were $150,000 or more are limited to making catch-up contributions to a Roth account in their employer’s 401(k) or similar retirement plan. A high percentage of employer sponsored plans offer a Roth option, if this is the case for your employer all you have to do is to make sure that you set this up with your employer.
Employers are not required to offer a Roth option in their plans. If this is the case with your employer’s plan then you will not be able to make catch-up contributions if your prior year income exceeds the limit.
Those who are affected by this rule, whose plan does not offer a Roth option, will not be allowed to make catch-up contributions to their plan.
‘Super’ catch-up contributions
Beginning in 2025, the rules on catch-up contributions for 401(k)s and other employer-sponsored retirement plans were changed to add “super” catch-up contributions for plan participants who are aged 60 to 63. The limit in 2025 was $11,250 and remains there in 2026.
These higher catch-up contributions can be made to a traditional 401(k) or to a Roth option in a 401(k) or other type of employer sponsored retirement plan. Those whose catch-up contributions are limited to Roth contributions can still take advantage of these higher catch-up limits as long as their plan offers a Roth option.
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Implications of these changes
These changes in rules can have a number of implications for impacted plan participants.
For those who are required to make catch-up contributions to a Roth account, some planning is needed. If they were already contributing to both the traditional and Roth options in your retirement plan, this may just involve adjusting the amount that goes to the traditional and Roth options for your non-catch-up contributions.
For those who were making any contributions only to the traditional option, they will have to adjust their tax planning to adjust for the loss of pre-tax contributions to the extent they make catch-up contributions. For those who are impacted and whose plans do not offer a Roth option they will need to find other ways to add to their investments.
One option might be contributing to a Roth IRA. The amount that can be contributed will depend on your income and tax filing status. Another option can include contributing to a traditional IRA. Based on your income these contributions will at best be only partially pre-tax with the rest being after-tax.
Other options can include increased contributions to taxable investment accounts as well as ensuring that your spouse (if you are married) is maximizing their contributions to their retirement plan.
As far as the “super” catch-up contributions, those who are eligible should take full advantage of this extra retirement savings opportunity to the extent possible. For those who are not impacted by the Roth catch-up rule, these extra contributions can be made to either or both the Roth or traditional options in their plan as they see fit. For those impacted by the Roth rule, all catch-up contributions must be made to their plan’s Roth option.
For anyone who is impacted by either or both of these changes it makes sense to consult with your financial advisor to discuss the best way to proceed.
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