Key Takeaway
- If your 2025 FICA wages from your current employer exceeded $150,000, every catch-up contribution you make to a 401(k), 403(b), or governmental 457(b) plan in 2026 must go into a Roth account, no exception and no grandfathering. If your plan doesn’t offer Roth, you cannot make catch-up contributions at all this year, costing a 50-or-older saver up to $8,000 in tax-advantaged space, or up to $11,250 if you’re between ages 60 and 63.
If you earned more than $150,000 in FICA wages from your employer in 2025 and you’re 50 or older, your 401(k) catch-up contributions are Roth-only starting January 1, 2026. Pre-tax catch-ups are gone for you. And if your employer’s plan doesn’t offer a Roth option, you can’t make catch-up contributions at all.
Mid-year is a reasonable time to confirm your situation, because many high earners are already several months into 2026 with the wrong setup.
What Section 603 of SECURE 2.0 Actually Does
The SECURE 2.0 Act of 2022 included Section 603, which rewrote the catch-up contribution rules for higher-income workers. The IRS delayed enforcement twice before finalizing the rules in September 2025 regulations. Those final regulations formally take effect in 2027, but the statutory requirement itself kicked in January 1, 2026. For 2026, plan sponsors are expected to comply in “reasonable, good faith” under Notice 2023-62’s transition framework.
The practical effect is immediate. The IRS’s November 13, 2025 Notice 2025-67, which also set the 2026 contribution limits, confirmed the Roth catch-up wage threshold at $150,000. That’s the figure pulled from Box 3 of your 2025 Form W-2. Box 3 reports Social Security wages, which are your FICA wages. It’s not the same as your gross income, and it’s not your modified adjusted gross income. FICA wages are calculated per employer. If you work for two unrelated employers and earn $100,000 from each, neither triggers the mandate, even though your total income is $200,000.
For 2026, the standard catch-up limit is $8,000. Workers ages 60 through 63 can contribute up to $11,250 under SECURE 2.0’s “super catch-up” provision. Both amounts must be Roth for high earners. The base contribution limit is $24,500, unaffected by the Roth mandate. High earners can still split that base however they like between pre-tax and Roth. The restriction applies only to the catch-up layer.
The Trap Nobody Told Plan Participants About
Here is the clause the marketing materials skip: plans that do not offer Roth contributions at all cannot accept catch-up contributions from workers above the $150,000 threshold. The IRS made this explicit. A plan sponsor cannot simply ignore the Roth mandate and continue routing catch-ups into the pre-tax account. If the plan has no Roth feature and a participant subject to the rule tries to make a catch-up contribution, the plan administrator is supposed to block it.
That’s $8,000 in tax-advantaged space, gone. For a 60-to-63-year-old, it’s $11,250.
Small and mid-sized employers are the risk zone. Large plans had time to add Roth features, and most did. But plans sponsored by smaller businesses, professional practices, and certain governmental entities may not have acted yet. The plan amendment deadline is December 31, 2026, for most calendar-year plans. The amendment deadline and the operational compliance deadline are not the same thing. Operational compliance was supposed to start January 1. The formal document amendment can follow, but the practice has to be in place now.
If your plan hasn’t offered Roth contributions before and you’re a high earner who has been making catch-up contributions this year, check your pay stubs and your plan statements. Review your employer’s Summary Plan Description. If you’re getting pre-tax catch-up contributions booked normally, ask your HR or benefits department whether the plan has been amended to add a Roth feature. If it hasn’t, those contributions may need to be corrected.
The IRS correction path under the final regulations involves reclassifying the contributions to Roth and adjusting payroll records. That can mean amended W-2s. Discovering the problem in December is a worse version of this problem than discovering it now.
What the Tax Trade-Off Looks Like
Roth catch-up contributions are made with after-tax dollars. You don’t get the deduction in the year of contribution. The upside: qualified Roth distributions in retirement come out tax-free, including growth, as long as the Roth 401(k) account satisfies a five-year holding period. For a high earner currently in the 32% or 37% federal bracket who expects a lower effective rate in retirement, the Roth mandate works against them in the short term. For a high earner who expects their tax rate to stay elevated or rise, the Roth treatment may be a net positive.
Run the numbers before assuming the mandate is purely negative. An $8,000 Roth catch-up contribution compounding tax-free for fifteen years at 7% growth yields roughly $22,000 in tax-free retirement income. The same $8,000 pre-tax contribution yields the same growth but with ordinary income tax owed at distribution. At a 24% retirement tax rate, that tax bill is around $5,300. The math favors Roth when the future tax rate is high enough relative to the current rate.
The Roth IRA is a separate account with separate five-year clocks. A Roth 401(k) and a Roth IRA each have their own aging rules for tax-free distributions. Don’t assume that years of Roth IRA contributions automatically satisfy the Roth 401(k) clock. They don’t.
What High Earners Should Do Before Year-End
Start by checking your 2025 Form W-2, Box 3. If Box 3 exceeded $150,000, the mandate applies to you in 2026. Confirm your employer’s plan offers a Roth contribution feature by reviewing the plan’s Summary Plan Description or asking HR directly. Confirm that your current catch-up election is routed to Roth, not to the pre-tax account. Many plans use a “spillover” design where contributions above the $24,500 base limit automatically become catch-up contributions, but the Roth designation still has to be applied correctly on top of that.
If you want personalized guidance on whether Roth or pre-tax strategy makes more sense for your specific bracket and timeline, a best financial advisor registered as a fiduciary under the Investment Advisers Act of 1940 can model the comparison accurately. A fee-only RIA has no incentive to favor one tax treatment over another. A broker-dealer operating under Reg BI (the SEC’s Regulation Best Interest, effective since June 2020) owes you a best-interest standard on specific recommendations, but the duty is narrower than fiduciary duty. Ask which standard applies before acting on advice.
For those wanting to explore additional Roth options beyond the 401(k), the 2026 Roth IRA income phase-out starts at $153,000 for single filers and $242,000 for married filing jointly. High earners above those thresholds can’t contribute directly to a Roth IRA, but a backdoor Roth conversion remains available if the pro-rata rule doesn’t create a tax headache.
One more number worth knowing: the best annuities market is active for high earners building tax-deferred income outside the 401(k) limits. Fixed and fixed-indexed annuities have no IRS contribution caps and grow tax-deferred, though they’re insurance products regulated by state departments of insurance, not by the IRS or SEC. That’s a different kind of protection than a 401(k) carries.
Section 603 of SECURE 2.0 is one of those provisions that reads simply on the first pass and gets complicated on the third. The statute says high earners must use Roth. The contract says your plan has to actually offer Roth or the contribution doesn’t happen at all. Check both before assuming everything is fine.
