The Mandatory Roth Catch-Up Starting 2026
Starting January 1, 2026, high-earning employees age 50 and over can no longer take their catch-up contributions as pre-tax dollars. The catch-up must be Roth. The rule comes from SECURE 2.0 §603 and applies whenever your prior-year FICA wages from the same employer exceed $145,000 (2023 dollars, indexed thereafter).
What the rule says, precisely
If your prior-year wages from the employer sponsoring the plan exceed the threshold, any catch-up contribution you make in the current year — under §414(v) or the §414(v)(2)(E) super catch-up for ages 60–63 — must be designated Roth. The threshold is $145,000 of FICA wages (Box 3 of Form W-2), set in 2023 dollars and adjusted for inflation after 2024. The catch-up itself is still optional; only its tax treatment is forced.
Who is and isn't caught
- Caught: employees with prior-year FICA wages from this employer above the threshold. Wages from a different employer are irrelevant.
- Not caught: employees whose prior-year wages were below the threshold, even if current-year wages are higher.
- Not caught: self-employed individuals, partners, and anyone whose compensation is not reported on Form W-2 — partnership guaranteed payments and self-employment earnings are not FICA wages for this purpose.
- Not caught: employees of plans that do not offer a Roth option. The rule was designed to push such plans to add Roth; SECURE 2.0 §603(c) allows a plan to refuse to offer catch-ups at all rather than add Roth, but doing so forfeits catch-up access for everyone.
The two-year delay
The rule was originally scheduled to take effect January 1, 2024. IRS Notice 2023-62, issued in August 2023, granted a two-year administrative delay until January 1, 2026, in response to industry comments that recordkeepers and payroll systems could not be ready in time. Proposed regulations published January 10, 2025 confirm the 2026 effective date and add operational guidance.
Why this matters for high earners
The mechanical consequence is straightforward: the catch-up contribution ($7,500 in 2025, plus the $11,250 super catch-up for ages 60–63) loses its current-year deduction. For a 60-year-old in a 37% federal bracket earning $250,000, the lost deduction on the full $11,250 super catch-up costs $4,162 in current-year taxes. Whether that is a net loss depends on bracket expectations in retirement, but the cash-flow hit lands in 2026.
Action items before year-end 2025
- Confirm the plan offers Roth. If it does not, push the employer to add it — without a Roth option, catch-ups disappear entirely.
- Plan around the wage threshold. Bonuses, RSU vesting, and deferred-compensation timing affect prior-year FICA wages. Pushing wages below the threshold in one year escapes the rule the following year.
- Reset withholding. Roth catch-ups reduce take-home pay by the marginal-rate equivalent of the lost deduction; payroll systems may not adjust automatically.
Sources
- SECURE 2.0 Act of 2022, §603, mandatory Roth catch-up. Division T of Pub. L. 117-328: congress.gov/bill/117th-congress/house-bill/2617
- IRS Notice 2023-62, two-year administrative transition period: irs.gov/pub/irs-drop/n-23-62.pdf
- IRS proposed regulations on §414(v)(7) Roth catch-up requirement, REG-100669-24 (January 10, 2025): federalregister.gov/documents/2025/01/10/2025-00350
- Internal Revenue Code §414(v), catch-up contributions (Cornell LII): law.cornell.edu/uscode/text/26/414
- IRS, "Issue Snapshot — Designated Roth Contributions": irs.gov/retirement-plans/designated-roth-account
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