New 401(k) Rules starting January 1st. 2026
by - Mark Ward,
artist - Daisy Lopez
Starting January 1, 2026, high-income earners (those with more than $145,000 in wages from the previous year) who make 401(k) catch-up contributions must make them on a Roth (after-tax) basis, according to final IRS regulations. This change, mandated by the SECURE 2.0 Act, requires high earners to pay taxes on these extra contributions upfront, which could impact their tax deductions and requires their plan to offer a Roth option. The $145,000 threshold is adjusted for inflation annually.
What's Changing for High Earners
Mandatory Roth Catch-Up Contributions:
If your wages from the prior year were over $145,000, your catch-up contributions to your 401(k) or 403(b) must be Roth (after-tax) contributions.
Loss of Pre-Tax Deduction:
You will no longer be able to make these catch-up contributions on a pre-tax basis, meaning the deduction is lost, according to The Wall Street Journal. However, all contributions made to the Roth portion will grow tax-deferred until distributed, and will come out completely tax-free.
Plan Availability:
Your employer's 401(k) plan must offer a Roth feature for this rule to apply. High earners without access to a Roth 401(k) will be unable to make these catch-up contributions at all, notes The Wall Street Journal.
Applies to All Catch-Up Contributions:
This new rule applies to both regular catch-up contributions for those 50+ who can do $7,500 in 2025 and $8,000 in 2026 (projected) and the "super catch-up" contributions available to those ages 60-63 who can do $11,500 in 2025 and $12,000 in 2026 (projected).
What to Do Now
Determine if you are likely to be affected by the $145,000 income threshold for 2026, says The White Coat Investor.
Review your plan documents or contact your plan administrator to confirm if your 401(k) offers a Roth 401(k) option.
Discuss your specific situation with a financial advisor or tax professional to understand how this rule impacts your retirement savings and tax strategy.
Thank you all for your continued trust and confidence,
Mark A. Ward
V.P., Operations & Chairman IPC