If your 2025 Social Security wages from the employer sponsoring your 401(k) topped $150,000, your 2026 catch-up contributions have to go in as Roth, not pre-tax. The catch-up itself is $8,000 for age 50 and up, on top of the $24,500 deferral limit. The deduction is what changes, not the amount.
What actually changed on January 1
Nothing about how much you can put in. The change is which tax bucket the catch-up portion lands in.
Under SECURE 2.0, starting with the 2026 plan year, a participant age 50 or older whose prior-year FICA wages from that same employer exceeded the threshold has to designate catch-up contributions as Roth. Same dollars, after-tax going in, income tax-free coming out later if the qualified distribution rules are met. You lose the deduction this year and you pick up the potential for income tax-free growth on that slice instead.
For someone in a high bracket writing California state tax on top of federal, that is a real number in the year it happens. Whether it nets out in your favor depends on your bracket now versus your bracket in retirement, which is exactly the calculation nobody can settle for you in a blog post. Worth running with your CPA against your own numbers.
Keep in mind the plan has to offer a Roth source for any of this to work. If it does not, an affected participant may not be able to make catch-up contributions at all for that year. That is a question for your plan administrator, not a guess.
The threshold is measured per employer, not per household
This is the part that catches people.
The measurement is prior-year FICA wages from the employer sponsoring the plan. Form W-2, Box 3, Social Security wages. Not your household income. Not your adjusted gross income. Not your total comp including the RSU vest that showed up in Box 1 but not Box 3.
Two consequences that surprise people. First, a dual-income couple in Carmel Valley clearing well past $150,000 combined may have neither spouse over the threshold individually. Second, someone who left one employer in June 2025 and started at another in July may have been paid more than $150,000 for the year and still be under the threshold at each employer separately. Keep in mind that how wages are counted across employers is governed by the plan's own reading of the regulations, and controlled-group and common-paymaster arrangements can change the answer entirely. This one is worth confirming rather than assuming in either direction.
Illustrative composite only, not a real client: a biotech director changes employers mid-2025 and shows Box 3 wages of roughly $120,000 at the old company and roughly $110,000 at the new one. Total pay is well over the threshold, but the rule looks at the sponsoring employer's wages, so the 2026 catch-up at the new plan may still be available pre-tax, depending on how the two employers are related and how the plan applies the rule. Facts vary and the plan's own reading governs, so confirm it with the plan administrator and your CPA before assuming either answer.
That mid-year move creates a second item worth handling separately. The old plan is still sitting there with your balance in it, and the decision about what to do with it is not the same decision as how to structure this year's catch-up. We walked through the options for that one already in what to actually do with an old 401(k).
One more, and this one is narrow. The rule keys off FICA wages, so income that is not FICA wages from the plan sponsor sits outside the measurement. A partner in a practice taking self-employment income rather than W-2 wages is the common example. That is a fact-specific call to evaluate with your CPA, not a strategy to assume.
The 2026 numbers, next to 2025
| Limit | 2025 plan year | 2026 plan year |
|---|---|---|
| Elective deferral limit, 401(k)/403(b)/governmental 457/TSP | $23,500 | $24,500 |
| Catch-up, age 50 and over | $7,500 | $8,000 |
| Total, age 50 and over | $31,000 (sum) | $32,500 |
| Higher catch-up, ages 60 through 63 during the year | $11,250 | $11,250 (unchanged) |
| Total, ages 60 through 63 | $34,750 (sum) | $35,750 (sum) |
| Section 415(c) total contribution limit, all sources | $70,000 | $72,000 |
| IRA contribution limit | $7,000 | $7,500 |
| Roth catch-up wage threshold (prior-year FICA wages) | $145,000 statutory, as indexed for the prior year | $150,000, measured on 2025 wages |
The 415(c) ceiling is the one people forget, and it is the one that decides whether an after-tax or match dollar has anywhere to go. Per IRS Notice 2025-67: "The limitation for defined contribution plans under section 415(c)(1)(A) is increased in 2026 from $70,000 to $72,000." Catch-up dollars sit outside that ceiling, so switching them to Roth does not use up room you were counting on somewhere else.
The base limits come from the IRS release 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (IR-2025-111, Nov. 13, 2025), which also confirms the $32,500 combined figure for participants 50 and over in 2026.
Name what does not change
Your total contribution room does not change. $32,500 at age 50 and up in 2026, $35,750 if you turn 60 through 63 during the year, same whether the catch-up goes in pre-tax or Roth.
Your employer match does not change, and it stays pre-tax unless your plan lets you elect otherwise.
Your investment lineup does not change either. Roth catch-up dollars land in the same funds at the same internal expense you are already paying, which is worth weighing alongside the tax character of that one $8,000 slice. That is a separate topic and we covered it in revenue sharing and 12b-1 fees.
And the IRA catch-up is untouched by this rule. It runs on its own track, $7,500 base for 2026 per IR-2025-111, with a separate age-50 catch-up amount.
The part that is still moving
Treasury and the IRS issued final regulations on the Roth catch-up requirement in September 2025. As written, 2026 operates as a good-faith transition year, the regulations formally apply beginning in 2027, and conforming plan amendments are expected by December 31, 2026.
Practically, that means two plans could handle 2026 slightly differently and both could be defensible. Some payroll systems flip affected participants to Roth automatically. Some send a notice and wait. Some are still testing the wage feed against Box 3. Confirming which one yours is doing, before the first paycheck of the year clears, is a five-minute question to HR or the recordkeeper that avoids an amended election in March.
Where this gets more involved is when the catch-up decision is sitting next to a concentrated stock position, a deferred comp election, and a bracket that moves with vesting. Those interact. Our San Diego HENRY strategy page walks through how the tax and retirement account pieces get sequenced together rather than one at a time.
Questions people actually ask
Does the $150,000 threshold count my spouse's income or my household income?
No. The measurement is prior-year FICA wages from the employer that sponsors the plan, reported in Box 3 of your Form W-2. Household income and adjusted gross income do not enter into it. A couple well over $150,000 combined may have neither spouse individually above the threshold.
What if I changed employers during 2025?
The wages are measured at the employer sponsoring the plan you are contributing to. Whether wages from a prior employer get counted alongside the new one depends on the relationship between the two employers and on how your plan reads the regulations, and controlled-group or common-paymaster arrangements can change the result. This is not something to assume in either direction. Confirm it with the plan administrator and your CPA.
Can I still make catch-up contributions if my 401(k) has no Roth option?
If you are above the wage threshold and the plan does not offer a Roth source, the plan may not be able to accept your catch-up contributions for that year. Whether your plan is adding a Roth source is a question to put to HR or the recordkeeper directly.
Does this change how much I can contribute in total?
No. Per IRS release IR-2025-111 (Nov. 13, 2025), the 2026 elective deferral limit is $24,500 and the age-50 catch-up is $8,000, for $32,500 total. Participants who are 60 through 63 during 2026 have a catch-up of $11,250. The rule changes the tax treatment of the catch-up, not the amount.
Is 2026 the year this is actually enforced?
The final regulations issued in September 2025 treat 2026 as a good-faith transition year, with the regulations formally applying starting in 2027 and plan amendments expected by December 31, 2026. Administration in 2026 may vary by plan, which is why confirming your own plan's approach matters more than the general rule.
If you want to look at your own numbers
Two things worth knowing before you decide anything. One, what Box 3 on your 2025 W-2 actually says. Two, what your plan is doing with catch-up elections this year. The rest of the sequencing, and how it fits with the concentrated stock and deferred comp side, is what the San Diego HENRY strategy page covers. If it would help to walk through yours, a complimentary review can be scheduled here: book a time. Do you want to take a look at that?
This material is provided for educational and informational purposes only and should not be construed as a recommendation regarding any retirement plan election, Roth contribution, catch-up contribution, deferred compensation election, or other financial strategy. Tax laws, retirement plan provisions, and IRS guidance are subject to change. The benefits of Roth and pre-tax contributions depend on an individual's circumstances, tax status, future tax rates, and retirement objectives. Consult your tax advisor, financial professional, and plan administrator before making decisions regarding retirement plan contributions.