High Earners Must Make Catch-Up Contributions in Roth Dollars This Year. The Regulations Explaining How Do Not Apply Until Next Year.

A rule that Congress wrote in 2022 and the IRS twice postponed is now operating. Since the start of this year, a worker over 50 whose wages from their employer crossed a set threshold in the prior year can no longer make a pre-tax catch-up contribution to a 401(k), 403(b) or governmental 457(b) plan. The catch-up must be a designated Roth contribution — paid with after-tax dollars, withdrawn tax-free later, subject to the plan's Roth rules.

The unusual feature of 2026 is that the requirement is live while the regulations interpreting it are not. Treasury published final regulations on September 16, 2025, at 90 FR 44527. They took effect November 17, 2025. But their general applicability date is contributions in taxable years beginning after December 31, 2026 — that is, next year. For this year, plan sponsors are operating the statute under a reasonable, good-faith interpretation standard, with the final regulations available as the clearest available guide to what Treasury thinks the statute means.

Where the Requirement Came From

Section 603 of the SECURE 2.0 Act of 2022 added section 414(v)(7) to the Internal Revenue Code. It provides that a catch-up eligible participant whose wages from the employer sponsoring the plan exceeded a threshold in the preceding calendar year must have any catch-up contributions treated as designated Roth contributions. It also requires that a plan permitting catch-up contributions must offer the Roth option to all catch-up eligible participants, or none may make catch-ups at all.

In Notice 2023-62 the IRS created an administrative transition period covering the first two taxable years beginning after December 31, 2023 — 2024 and 2025. During those years catch-up contributions were treated as satisfying section 414(v)(7)(A) even if they were not designated Roth contributions, and plans without a Roth feature were treated as satisfying section 414(v)(7)(B). That relief expired with taxable years beginning after December 31, 2025.

The Threshold, and Which Year's Wages Count

The statutory base figure is $145,000, adjusted for cost of living. The regulation at 26 CFR 1.414(v)-2 sets the indexing method: increases follow the section 415(d) methodology, using the third quarter of 2023 as the base period, with any increase rounded down to the nearest multiple of $5,000. Notice 2025-67 states that the Roth catch-up wage threshold for 2025 — the figure used to determine whether an individual's catch-up contributions for 2026 must be designated Roth — is increased from $145,000 to $150,000.

So the test for 2026 is: did the participant have more than $150,000 in FICA wages in 2025 from the employer that sponsors the plan? Two details matter and are easy to get wrong.

• The measure is FICA wages, the Social Security wage figure, not total compensation or taxable income.
• The measure is per employer. Under the regulation's separate-employer rule, wages from one participating employer are not aggregated with wages from another employer in a multiple-employer plan. Someone who earned $90,000 at each of two employers in 2025 crossed no threshold at either.

The 2026 Dollar Limits

• Elective deferral limit under section 402(g): $24,500, up from $23,500
• Catch-up limit under section 414(v)(2)(B)(i) for participants age 50 and over: $8,000, up from $7,500
• Increased catch-up for participants who reach age 60, 61, 62 or 63 during the year: $11,250, unchanged from 2025
• Roth catch-up wage threshold applied to 2025 wages: $150,000, up from $145,000
• Section 415(c) annual additions limit: $72,000, up from $70,000
• Section 401(a)(17) compensation limit: $360,000, up from $350,000
• Highly compensated employee threshold: $160,000, unchanged

How Plans Are Meant to Operate It

The regulations permit a deemed Roth election. A plan may provide that a participant subject to the requirement is treated as having irrevocably designated catch-up contributions as Roth contributions once deferrals exceed the section 401(a)(30) limit. That deeming is conditional: the participant must have an effective opportunity to elect otherwise. The deemed election must also stop within a reasonable period once the participant no longer meets the threshold, or when an amended Form W-2 shows the requirement did not apply.

Where a pre-tax catch-up is made that should have been Roth, the final regulations provide two correction methods. Under the Form W-2 method the amount, adjusted for earnings or losses, is moved from the pre-tax account to the designated Roth account and reported as a Roth contribution on the original Form W-2 — available only if that W-2 has not yet been filed or furnished. Under the in-plan Roth rollover method the amount, again adjusted for earnings or losses, is rolled over from the pre-tax to the Roth account and reported on Form 1099-R.

Correction deadlines depend on the limit that was breached: the last day of the taxable year following the year of the failure for statutory limit violations, and the last day of the following plan year for employer-provided limit and ADP limit violations. Failures under $250 are treated as de minimis and excused, as are failures caused by an amended Form W-2.

Who Is Outside the Rule

Because the test is FICA wages from the sponsoring employer, individuals who have none are not subject to the Roth catch-up requirement at all. The regulations name self-employed individuals, partners, and certain state and local government employees. They remain eligible to make catch-up contributions on a pre-tax basis. Collectively bargained plans and governmental plans also receive extended applicability dates for the final regulations.

Whether a Roth catch-up leaves a particular household better or worse off depends on the relationship between their current marginal rate and their expected rate in retirement, and that is a calculation specific to each person's circumstances. This article describes the mechanics of the requirement and is not tax advice; participants should consult the plan's own documents and a qualified tax professional about their situation.