Written by: Greg Phillips, AIF®, CPFA®, C(k)P®
The IRS has released the new retirement contribution limits for 2026, and the numbers are going up again. Higher limits mean a greater opportunity to save more for your future, especially for those age 50 and older who qualify for “catch-up” contributions.
Here are the key 2026 limits:
- 401(k), 403(b), and 457 Plans: $24,500 employee contribution limit (Up $1,000 from 2025)
- Catch-Up Contribution (Age 50+): $8,000 (Up $500 from 2025)
- Catch-Up Contribution (Age 60-63): $11,250 (No change from 2025)
With these higher limits coming, it’s the perfect time to make sure you understand an important rule change arriving at the same time—one that affects how catch-up contributions must be made for certain individuals.
The 2026 Roth Catch-Up Rule: What’s Changing?
Beginning January 1, 2026, the SECURE 2.0 Act introduces a new requirement for catch-up contributions:
If you are age 50 or older and earned more than $150,000 in W-2 wages in 2025, all of your 2026 catch-up contributions must be made as Roth (after-tax).
Here’s what that means in practice:
- You can still make the full $8,000 catch-up contribution in 2026 (Or $11,250 if age 60-63).
- But if your 2025 W-2 wages were above $150,000, those catch-ups must be Roth.
- Roth contributions are taxed up front, but they grow tax-free and can be withdrawn tax-free in retirement (if IRS rules are met).
- If your 2025 W-2 wages were below $150,000, you can choose either pre-tax or Roth for your catch-up contributions.
Important: This rule applies only to W-2 wages, not self-employment income or K-1 earnings.
Do You Need to Do Anything Right Now?
For most people, no major action is required. But here are a few things to keep in mind:
- Your payroll system should automatically switch your catch-up contributions to Roth if you’re above the income threshold.
- If you prefer not to make Roth catch-ups, you’ll need to adjust your deferral election before 2026.
- It may be helpful to review your strategy with a tax or financial advisor to determine whether Roth or pre-tax contributions make the most sense for your situation.
Questions About How This Affects You?
If you’re unsure how this rule applies to your income, retirement savings strategy, or tax planning, Twelve Points Retirement Advisors can help you understand your options and make confident decisions.
You can reach our team at guidance@twelvepoints.com.