If your W-2 wages topped $150,000 last year, your catch-up contributions changed on January 1. And if your plan has no Roth option, they may have disappeared.
Beginning January 1, 2026, if your prior-year FICA wages from the employer sponsoring your retirement plan exceeded $150,000, every catch-up contribution you make has to go into the Roth side of the plan. Pre-tax catch-ups are no longer available to you.
This comes out of SECURE 2.0 and it was originally supposed to start in 2024. The IRS granted a two-year administrative transition because payroll systems and recordkeepers weren’t ready. That transition is over.
I’m writing about it because almost nobody I talk to knows it happened. It was announced during a window when everyone was focused on something else, and the people it affects most — owners in their fifties making catch-up contributions — tend not to read plan compliance bulletins.
The test has three specific parts, and each one narrows it.
It is FICA wages, not total income. That means W-2 Social Security wages. Self-employment earnings do not count. A sole proprietor or a partner making $400,000 through a Solo 401(k) is not subject to this rule at all, because none of that is FICA wages.
It is prior year, not current year. For 2026, the question is what you earned in 2025.
It is per employer. If you changed jobs in 2026, you have no 2025 wages from the new employer, so the rule doesn’t follow you there.
The group this lands on hardest is S-corp owners. If you’ve elected S-corp treatment and you’re paying yourself a reasonable salary above $150,000, those are W-2 wages and the rule applies to you directly. That’s a fairly common profile among the businesses I work with.
Here’s the consequence most people haven’t connected yet.
If a plan doesn’t offer a Roth feature, affected participants can’t make catch-up contributions at all. Not pre-tax, because the law now requires Roth. Not Roth, because the plan doesn’t have it. The contribution simply isn’t available to them.
For 2026 that’s $8,000 for someone 50 or older, and $11,250 for anyone who turns 60 through 63 during the year. Losing it entirely because of a plan feature nobody got around to adding is an avoidable and fairly expensive mistake.
Adding a Roth feature is a discretionary plan amendment. The legal deadline for a calendar-year plan is the last day of the plan year in which it’s effective — December 31, 2026. But the practical deadline is much earlier, because payroll and the recordkeeper have to be able to actually process it before the first payroll where someone would otherwise be making a catch-up. A December amendment doesn’t retroactively fix a year of missed contributions.
First, does your plan document include a Roth deferral feature? Second, is your payroll provider actually coded to route catch-up contributions for affected participants to the Roth source? Those are separate questions and I have seen plans pass the first and fail the second.
Not necessarily, and I want to be careful not to frame this purely as a loss.
You give up a deduction in the current year at what is presumably a high marginal rate. That’s the cost, and for someone in the 32% or 35% bracket it’s not trivial. But what you get is money that grows and comes out tax-free, with no required minimum distributions on the Roth side.
For an owner who has spent fifteen years stuffing everything into pre-tax accounts, a forced allocation toward Roth is arguably fixing a problem rather than creating one. Large pre-tax balances become a tax bill at 73 whether you want the money or not, and they drive Medicare surcharges along the way. Having both kinds of money is what gives you control over taxable income in retirement.
So the honest read: it’s a real cost this year, and for a lot of people it’s a net positive over a full lifetime. What makes it frustrating is that it was removed as a choice.
If you’re an affected participant, confirm your plan has Roth available and that payroll is set up correctly, then keep making the catch-up. Losing $8,000 of contribution room to avoid a tax you were going to pay eventually is the wrong trade.
If you sponsor the plan, this is a fiduciary item. Check the document, check payroll, and if the Roth feature isn’t there, start the amendment now rather than in the fall.
And if you’re in the 60 through 63 window, pay attention. That super catch-up of $11,250 replaces the standard $8,000 rather than stacking on top of it, it’s available only in those four calendar years, and plans are not required to offer it. Check your plan document before building a paycheck plan around it.
Participants whose prior-year FICA wages from the employer sponsoring the plan exceeded $150,000 must make all catch-up contributions on a Roth basis beginning in 2026. The test uses W-2 Social Security wages from the prior year, applies per employer, and does not apply to self-employment earnings.
Affected high earners cannot make catch-up contributions at all. The law requires those contributions be Roth, and if the plan has no Roth source, the contribution is unavailable. Adding a Roth feature is a discretionary amendment that must also be operational in payroll before affected participants attempt catch-up contributions.
The standard catch-up for participants age 50 and older is $8,000 for 2026. Participants who turn 60, 61, 62, or 63 during the year may contribute an enhanced catch-up of $11,250, which replaces rather than adds to the standard amount. Plans are not required to offer the enhanced catch-up.
Send me your plan documents or last year’s returns and I’ll tell you what I see — whether or not you end up working with me.
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Sage W. DeMull, PPC® is a fee-based fiduciary advisor at DeMull Financial, 2624 Lake Lansing Rd Ste 200, Lansing, MI 48912. Figures reflect 2026 IRS limits per Notice 2025-67 and are adjusted annually. This is general information, not individualized tax, legal, or investment advice — your situation may differ, and you should consult your own tax professional. Securities and advisory services offered through LPL Financial, member FINRA/SIPC.