If you’re 50+ and want to make catch-up contributions to your employer-sponsored retirement plan, this article includes details on a SECURE 2.0 Act change that may affect how those contributions are made beginning in 2026.
Starting January 1, 2026, certain higher-earning participants will generally be required to make catch-up contributions on a Roth (after-tax) basis.
How the Rule Works
Beginning January 1, 2026, participants who are age 50 or older by December 31 and who earned more than $150,000 in FICA wages from the employer sponsoring the plan in the prior year will generally be required to make any catch-up contributions as Roth contributions.*
*The wage threshold is indexed for inflation and may change in future years.
Important notes:
- For 2026, eligible participants may still choose to make traditional pre-tax and/or Roth contributions up to the regular contribution limit (currently $24,500). However, if the Roth catch-up requirement applies, any catch-up contributions must be designated as Roth contributions.
- This requirement applies only to employer-sponsored retirement plans. Individual Retirement Accounts (IRAs) are not currently impacted by this rule.
Roth Contributions: A Refresher
Roth contributions are made on an after-tax basis, meaning income taxes are paid before the contribution is deposited into your retirement account.
Key characteristics of Roth contributions include:
- Contributions are included in taxable income in the year they are made
- Qualified withdrawals in retirement may be tax-free, if IRS requirements are met
- Contributions are deducted from pay after income taxes are withheld, which may reduce take-home pay
Roth contributions differ from traditional pre-tax contributions primarily in the timing of taxation. Not all retirement plans offer a Roth contribution option.
Important Clarification: Backdoor Roth IRA
These SECURE 2.0 retirement plan changes apply to employer-sponsored plans and do not affect an individual’s ability to make non-deductible contributions to a traditional IRA and later convert those amounts to a Roth IRA. This strategy is commonly referred to as a backdoor Roth contribution.
IRA contributions and Roth conversions are subject to IRS rules and eligibility requirements. Individuals considering this approach may wish to consult a qualified tax or financial professional.
Additional Considerations Related to the 2026 Rule
- Participants who currently make all contributions on a traditional pre-tax basis may see an increase in current taxable income if required to make Roth catch-up contributions.
- Participants who already make Roth contributions may experience little or no change as a result of this requirement.
- The effect of the Roth catch-up requirement can vary based on individual circumstances, plan design, and payroll implementation timing.
Participants are encouraged to consult a qualified tax advisor regarding their personal tax situation.
Staying Informed as You Plan for Retirement
Understanding how these changes may affect your retirement contributions, and how different account types fit into your overall tax picture, can help you feel more prepared as you approach retirement. FCT is committed to providing clear information to help participants stay informed, and encourages individuals to consult a wealth advisor and tax professional regarding their personal situation.