Income More than $150,000 Last Year? There Are New Rules on Catch-Up 401(k) Contributions
By Neil Rose, CFA
A rule change took effect this year that most of the people it affects haven’t noticed. If you’re 50 or older and earned more than $150,000 last year, your 401(k) catch-up contributions must now go in as Roth (after-tax) money.
Here are the 401(k) Contribution limits for 2026:
Maximum employee contribution: $24,500
Catch-up provision for workers over age 50: $8,000
Additional catch-up for workers aged 60-63: $11,250
Starting this year, no one can defer on pre-tax basis either catch-up provision.
Most workplace retirement plans have a Roth 401(k) option. Typically, after you max out your $24,500 contribution limit, additional amounts will automatically show as a Roth contribution on your paystub.
Employers should consider having a Roth option if they do not have one already as the rule affects everyone, including business owners.
Already put away more than $24,500 in 2026? Check your pay stub to see if the extra contributions show up as “Roth” or “after-tax.” Given 2026 is the first year of the new rule, plan administrators and payroll may not have adjusted yet. The good news is that it can be fixed by your employer or plan administrator.
Note the rules apply to those making over $150,000 last year. If you were under the threshold last year but are above it this year, the new rule doesn’t apply to you in 2026, but it will in 2027.
All told, the forced Roth route isn’t a bad one. Too many focus on minimizing their tax rates now, leaving many more exposed to tax increases in the future. With federal income tax rates historically low and many states likely to only increase tax rates over time, paying taxes now and saving in Roth form help hedge future tax risk.
Lastly—and this is important—check if your 2026 Form 1099-R categorizes contributions by money type; sometimes the Roth portion is not broken out separately. If it’s not, tell your tax professional the breakdown to prevent getting double-taxed.
About the Author
Neil Rose, CFA, is the founder and CEO of Regency Capital Management.
