Heads up, employers. Starting January 1, 2026, 401(k) catch-up contributions for high-income earners must be made on a Roth (after-tax) basis. If your plan doesn't offer a Roth 401(k) option, your highest-paid employees won't be able to make catch-up contributions at all. Here's what you need to know — and what to do before year-end.
What Changed?
The SECURE 2.0 Act (signed December 2022) introduced a major shift in how catch-up contributions work for higher-earning employees. Starting in 2026:
- Employees age 50+ who earned more than $150,000 in FICA wages (Box 3 of W-2) from your company during the prior year (2025) must make their catch-up contributions as Roth (after-tax) only.
- Pre-tax catch-up contributions are no longer an option for these individuals.
- This applies to 401(k), 403(b), and governmental 457(b) plans.
💡 Important: The $150,000 threshold is based on FICA wages from the employer sponsoring the plan — not household income or wages from other employers. This was adjusted from the original $145,000 due to inflation indexing.
2026 Catch-Up Contribution Limits at a Glance
| Category | 2025 | 2026 |
|---|---|---|
| 401(k) standard deferral limit | $23,500 | $24,500 |
| Catch-up (age 50+) | $7,500 | $8,000 |
| "Super" catch-up (ages 60–63) | $11,250 | $11,250 |
| Total max (under 50) | $23,500 | $24,500 |
| Total max (age 50+) | $31,000 | $32,500 |
| Total max (ages 60–63) | $34,750 | $35,750 |
The "Super" Catch-Up — Ages 60 to 63
SECURE 2.0 also introduced an enhanced catch-up for employees aged 60, 61, 62, or 63. These individuals can contribute up to $11,250 in catch-up contributions (instead of $8,000), bringing their total possible deferral to $35,750 in 2026.
Key details:
- This is optional — employers must elect to offer the super catch-up provision in their plan.
- Once the employee turns 64, they revert to the standard $8,000 catch-up limit.
- If subject to the high-income earner rule, super catch-up contributions must also be Roth.
What This Means for Employers
Three things you need to do:
- Check your plan document — Does your 401(k) plan offer a Roth contribution option? If not, you need to add one before January 1, 2026, or your high-earning employees lose the ability to make any catch-up contributions.
- Identify your high-income earners — Review 2025 W-2 Box 3 (FICA wages) to determine which employees earned over $150,000. These employees must be flagged in your payroll system for mandatory Roth catch-ups.
- Update payroll systems — Your payroll provider needs to route catch-up
contributions
correctly:
- Employees earning ≤ $150,000 → Can choose pre-tax OR Roth catch-up
- Employees earning > $150,000 → Must be Roth catch-up only
How iSolved Handles It
As a BlueWave HR client using iSolved People Cloud, the heavy lifting is done for you:
- Automatic FICA wage tracking — iSolved monitors W-2 Box 3 amounts to identify employees who cross the $150,000 threshold.
- Roth catch-up routing — Catch-up contributions for flagged high-income earners are automatically directed to Roth accounts.
- Super catch-up support — The system applies the enhanced $11,250 limit for employees aged 60-63 when your plan document allows it.
- Compliance alerts — If your plan doesn't yet offer a Roth option, your BlueWave HR team will flag this and help you get it set up.
FAQ
Does this apply to IRA catch-up contributions?
No. The mandatory Roth rule only applies to employer-sponsored plans (401(k), 403(b), 457(b)). IRA catch-up contributions are unaffected.
What if an employee earned $150,000+ from another employer but less from us?
The threshold is based on FICA wages from the employer sponsoring the plan only. If they earned $140,000 from you, they're not subject to the mandatory Roth rule in your plan — even if their total household income is much higher.
What if our plan doesn't offer Roth 401(k)?
Your high-income employees (age 50+) will not be able to make any catch-up contributions at all. This could be a significant retention issue for senior employees. Adding a Roth option should be a priority before year-end.
What is the super catch-up contribution for ages 60-63?
Under SECURE 2.0, employees aged 60, 61, 62, or 63 can make enhanced catch-up contributions of up to $11,250 in 2026 (instead of the standard $8,000 for age 50+). This brings their total possible 401(k) deferral to $35,750. Once they turn 64, they revert to the standard catch-up limit.
Need Help Updating Your 401(k) Plan?
BlueWave HR helps businesses navigate retirement plan compliance through iSolved — from catch-up contribution tracking to automated Roth election routing. Let us handle the complexity so you don't have to.
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