2026 Roth-Only Catch-Up Contributions for Employees Age 50+
Starting in 2026, employees age 50 and older who earn more than the IRS threshold (about $150,000, indexed annually) will only be allowed to make their 401(k) catch-up contributions as Roth. This means those extra “catch-up” amounts must be contributed after tax, not pre-tax.
If your plan doesn’t offer a Roth option, higher earners, including many business owners, won’t be able to make any catch-up contributions at all. Even though the rules won’t be fully enforced until 2027, employers are required to make a reasonable, good-faith effort to comply starting in 2026.
Roth catch-up contributions come from after-tax dollars, but the benefit is that they grow tax-free and can be withdrawn tax-free in retirement. For employers, this shift means you’ll need to review your current plan design to ensure it includes Roth, prepare payroll settings, and make sure your affected employees understand the change.
Action Items for Employers
Identify who’s affected by reviewing your 2025 compensation data and flagging anyone earning $150,000+ (indexed).
Notify higher earners who currently make catch-up contributions so they know their contributions will switch to Roth-only in 2026.
Work with your payroll provider now to set up Roth deduction codes ahead of time.
Educate employees on the difference between pre-tax and Roth contributions so they understand how this impacts their paycheck and taxes.
Coordinate with your recordkeeper to make sure payroll files and data feeds are updated to support the new Roth-only catch-up rules.
If you need help reviewing your 401(k) setup, communicating the changes to employees, or coordinating with payroll and plan providers, Rising Tide HR can guide you through a smooth and stress-free transition.
