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What You Need to Know About Roth Catch-Up Changes

For middle-aged Americans who are high income earners, the way you contribute to your retirement account could change in 2026. Starting January 1, employees deferring income as catch-up and super catch-up contributions may be required to make Roth deferral contributions. Previously, these employees had a choice to make catch-up contributions on either a pre-tax or Roth (after-tax) basis.

Let’s break down this change.

First, what is a deferral contribution?

A deferral is the amount an employee elects to withhold from their paycheck and deposit into their retirement plan, like a 401(k), before they receive it.

• Think of it as: “I’m sending part of my paycheck straight into my retirement account.”
• Employees can choose:
  • Pre-tax deferrals (reduces taxable income today)
  • Roth deferrals (taxed now, grows tax-free for qualified distributions)

Who can make catch-up deferrals?

Catch-up deferrals are extra contributions allowed for employees ages 50 and older on top of the regular annual limit. There are also super catch-up deferrals for those ages 60–63 as of the last day of the calendar year they contribute.

Who must make their 2026 catch-up deferrals as Roth?

Beginning January 1, certain high income earning employees must have their catch-up contributions treated as Roth (after-tax) contributions.

Employees are required to make Roth catch-up deferrals in 2026 if:

• They are aged 50 or older, and
• their 2025 Social Security wages (W-2, Box 3) from the plan sponsor are more than $150,000.

If both apply, all 2026 catch-up deferrals must be Roth.

Note: The $150,000 test is based on the prior-year W-2 every year. So, for 2026, you would look at 2025, for 2027 you would look at 2026, and so on. The wage measurement will be adjusted for inflation.

Who is not affected?

The Roth catch-up rule does not apply to:

• Employees under the age of 50
• Employees with $150,000 or less in 2025 Social Security wages
• Employees who don’t already contribute the maximum deferral. For 2026, that is $24,500. Catch-up contributions are deferrals above $24,500.
• Individuals with no Social Security wages, such as:
  • Owners taxed as partners
  • Independent contractors
  • Employees exempt from Social Security (certain government or public safety roles)
• Employees earning wages from a different employer. Only wages from the plan sponsor matter unless the employer elects optional wage aggregation, which is unlikely.

What to do now.

For plan sponsors:

1. Make sure your plan allows Roth deferral contributions. If you are a retirement plan client of JCCS, it does—move to step 2. We’ve made sure that is taken care of for you.
2. Ensure your payroll system can accommodate a separate Roth deferral catch-up election.
3. Communicate to your employees about the upcoming change and what it means for them.
4. Once your 2025 W-2s are issued, review and identify any employees who will be impacted by this change and notify them.

Extra credit!

Learn more about retirement plan contribution limits in 2026. This chart includes the 2026 limits along with the prior two years for an easy, side-by-side comparison.