As we welcome 2026, there are new rules for retirement plans. As of January 1, 2026, certain employees are now required to make their 401(k) catch-up contributions on a Roth (after-tax) basis.
This change impacts both employees and employers, requiring updates to payroll, plan administration, and participant communications.
What Is the New Roth Catch-Up Rule?
Under the new rules, employees age 50 or older who earned more than $150,000 in FICA wages from their employer in 2025 must make any catch-up contributions to their 401(k), 403(b), or governmental 457(b) plan as Roth contributions in 2026.
Employees who earned $150,000 or less in 2025 may continue to choose either pre-tax or Roth catch-up contributions in 2026.
What Should You Do Next?
Employers should take action now to ensure the new rule is applied correctly by:
- Coordinate with payroll providers to update systems for 2026. Payroll systems must track 401(k) deduction thresholds and designate catch-up contributions correctly. If you use a payroll service we suggest having confirmation in writing how they will implement this new requirement and what your responsibilities will be.
- Communicate with employees, especially those over the $150,000 threshold, about how this change will affect their retirement savings strategy.
- Consult your advisor to develop a compliance and communication plan.
Contact Us for Guidance
If you have questions about the mandatory Roth catch-up rule, its impact on your retirement plan, or other SECURE Act 2.0 provisions, we’re here to help.
