Older workers who earn above certain thresholds will soon lose the ability to make pre-tax 401(k) catch-up contributions, a shift that could reshape retirement planning for high earners while leaving core limits intact for everyone else. Starting with tax years beginning after Dec. 31, 2026, catch-up contributions for workers age 50 and older who exceeded $145,000 in prior-year wages must be made on a Roth (after-tax) basis, with the IRS confirming the timeline in final regulations and maintaining a transition period through 2025 for plan administration.<\/p>\n
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The Roth catch-up change stems from Section 603<\/a> of the SECURE 2.0 Act of 2022, which requires age\u201150+ catch-up contributions made by higher earners to be designated as Roth (after\u2011tax) rather than pre\u2011tax, with the intent of raising near\u2011term federal revenue while preserving catch\u2011up access and boosting tax\u2011free retirement balances over time. The change reflects a bipartisan legislative compromise<\/a> to fund SECURE 2.0\u2019s broader retirement enhancements by accelerating tax revenue via Roth treatment for high earners\u2019 catch\u2011ups. It stems from legislation<\/a> pushed forward by then-Finance Committee Chairman Ron Wyden, who said in 2021<\/a> that he was motivated by revelations in ProPublica<\/a> about Silicon Valley billionaire Peter Thiel\u2019s $5 billion tax-free account. Now every upper-middle-class American retiree will now be impacted by the resulting change.<\/p>\n Congress has set the earnings trigger at more than $145,000 of prior\u2011year FICA wages from the plan sponsor, indexed for inflation, and directed the Treasury and IRS to issue implementing regulations to operationalize the income look\u2011back and plan administration details across 401(k), 403(b), and governmental 457(b) plans.<\/p>\n