MoneyByte Points
- The 2026 Roth catch-up rule generally requires affected higher earners to make catch-up contributions with after-tax dollars.
- The wage threshold is more than $150,000 in 2025, generally measured using wages from the employer sponsoring the plan.
- For most 401(k) plans, eligible workers can contribute up to $32,500 at ages 50–59 or 64 and older, or $35,750 at ages 60–63, subject to plan and compensation limits.
Saving more for retirement can now affect your take-home pay differently. The 2026 Roth catch-up rule changes the tax treatment of extra workplace retirement contributions for certain employees age 50 and older. Understanding which wages count—and which contributions the rule covers—can help you avoid surprises when reviewing your payroll elections.
This guide complements Money Byte’s finance coverage with a practical look at retirement contributions.
What changes in 2026?
Affected workers must generally direct catch-up contributions into a designated Roth account within their workplace plan. The requirement does not automatically turn their regular contributions into Roth contributions.
There is an important timing distinction. In its September 15, 2025 announcement, the IRS explained that the final regulations generally apply from 2027. However, the transition relief generally ended December 31, 2025. Plans can implement the requirement during 2026 using a reasonable, good-faith interpretation of the law. Certain governmental and collectively bargained plans have special regulatory applicability dates.
Who meets the $150,000 wage test?
For 2026 contributions, the threshold looks back to 2025 wages. The IRS identifies the relevant FICA wages as those reported in Box 3 of Form W-2, generally from the employer sponsoring the plan. Household income, a spouse’s salary, and investment gains are not substitutes for that wage measure. Certain employer-aggregation rules can affect the calculation.
The threshold is more than $150,000, rather than $150,000 or more. The inflation-adjusted amount appears in IRS Notice 2025-67.
For example, a 55-year-old employee with $160,000 of relevant 2025 wages generally meets the test. Someone with exactly $150,000 does not exceed it. A 2026 raise alone does not determine whether the rule applies to that year’s contributions.
How much can you contribute?
For a standard 401(k) offering the applicable catch-up contributions:
| Age reached during 2026 | Regular employee limit | Catch-up allowance | Total |
|---|---|---|---|
| Under 50 | $24,500 | — | $24,500 |
| 50–59 | $24,500 | $8,000 | $32,500 |
| 60–63 | $24,500 | $11,250 | $35,750 |
| 64 or older | $24,500 | $8,000 | $32,500 |
These are employee contribution limits; employer contributions have separate rules. SIMPLE plans use different limits. Your plan’s terms and your compensation can also restrict what you contribute. See the IRS’s 2026 contribution limits.
How could your paycheck change?
Roth contributions do not provide the current federal income-tax exclusion available for pretax deferrals. In exchange, qualified withdrawals—including earnings—are excluded from federal taxable income. Generally, qualification requires meeting the five-tax-year rule and reaching age 59½, or qualifying through disability or death. Review the IRS’s designated Roth distribution guidance.
Consider an illustrative $8,000 catch-up contribution. If every dollar would otherwise reduce income taxed at a 24% federal marginal rate, switching that amount from pretax to Roth means $1,920 more in current federal income tax. That calculation excludes state taxes and other tax interactions; actual withholding depends on your payroll settings.
What should you check before year-end?
To apply the 2026 Roth catch-up rule to your situation:
- Review your 2025 W-2 and confirm the relevant wage figure with payroll.
- Ask whether your plan supports Roth catch-up contributions and how elections are handled.
- Check year-to-date contributions and remaining pay periods.
- Confirm whether the special ages-60–63 allowance applies.
- Revisit your cash budget before increasing deductions from your paycheck.
For broader reading, explore the Money Byte blog. A contribution target works best when it fits both your retirement goals and your current expenses.
Not financial advice.