401(k) Changes Coming in 2026: What High Earners Need to Know About Roth Catch-Up Contributions

Starting January 1, 2026, a major shift in retirement savings rules will affect many Americans aged 50 and older. If you earn more than $150,000 in wages during 2025, any catch-up contributions you make to your 401(k) in 2026 must go into a Roth account. This change, introduced under the SECURE 2.0 Act, eliminates the option for high earners to make pre-tax catch-up contributions. While this may feel like a loss of a valuable tax deduction, understanding the implications and opportunities can help you make the most of this new rule.

What’s Changing?

Catch-up contributions allow workers age 50 and older to save more than the standard annual limit in their employer-sponsored retirement plans. For 2026, the regular contribution limit for 401(k) plans will rise to $24,500, and the catch-up limit will increase to $8,000. If you’re between ages 60 and 63, you’ll have access to an enhanced “super catch-up” of $11,250, giving you a chance to accelerate savings during your peak earning years.

Under the new rule, if your prior-year wages exceed $150,000, all catch-up contributions must be Roth contributions made with after-tax dollars. That means you’ll pay income tax upfront on these contributions, but withdrawals in retirement will be tax-free. If your employer does not offer a Roth 401(k) option, you cannot make catch-up contributions at all.

Why the Change?

Congress raised tax revenue by introducing this provision, which shifts more contributions to Roth accounts that face immediate taxation rather than deferral. Lawmakers moved the rule’s start date from 2024 to 2026 to give employers time to update systems and plan documents. For savers, this marks the first mandatory Roth provision ever added to the tax code.

What Does This Mean for You?

If you’ve relied on pre-tax catch-up contributions to help reduce taxable income, this change can affect your strategy. Losing that deduction could increase your current-year tax bill by several thousand dollars, depending on your bracket. However, Roth contributions can offer long-term benefits including tax-free growth, tax-free withdrawals after age 59½, and no required minimum distributions (RMDs) at any age. For those who expect to remain in a high tax bracket during retirement or want to leave assets to heirs, Roth contributions can be beneficial.

Consider this scenario: You contribute $8,000 as a Roth catch-up in 2026 and pay taxes now. But if that amount grows to $40,000 by the time you retire, you withdraw every dollar tax-free. In contrast, you pay ordinary income tax on withdrawals from a traditional 401(k) contribution. If tax rates rise in the future, Roth withdrawals may become even more valuable.

Enhanced Savings Opportunities

The SECURE 2.0 Act also expanded limits for older workers. Those aged 60 to 63 can contribute an extra $11,250 on top of the standard limit. Maximizing these contributions for four years could add significantly to your retirement savings, assuming average market returns. This can be an opportunity to increase your nest egg during the final stretch of your career.

Action Steps Before 2026

1. Check Your Employer Plan
   Confirm whether your 401(k) offers a Roth option. If not, talk to HR or your plan administrator. Without a Roth feature, you won’t be able to make catch-up contributions under the new rule.
2. Review Your 2025 Income
   The $150,000 threshold is based on your prior-year wages. If you’re close to the limit, consider strategies to manage taxable income, such as timing bonuses or deferrals.
3. Update Your Contribution Elections
   If you qualify for catch-up contributions, plan to switch to Roth in early 2026. Starting in January can help maximize the time your money can grow tax-free.
4. Evaluate Your Tax Strategy
   Paying taxes upfront may feel painful, but it could help reduce future tax burdens. Work with a financial advisor to model scenarios based on your expected retirement income and tax rates.
5. Leverage Super Catch-Up Limits
   If you’re between 60 and 63, take advantage of the higher limits. These years can offer a unique window to accelerate savings.

The Bottom Line

The mandatory Roth catch-up rule changes the game for high earners nearing retirement. While it removes the immediate tax break of pre-tax contributions, it opens the door to tax-free growth and withdrawals, benefits that can outweigh the upfront cost for many savers. With contribution limits rising and enhanced catch-up provisions available, 2026 offers an opportunity to help strengthen your retirement strategy. Start planning now to help ensure you’re ready when the new rules take effect.

This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.

Jonathan E. Millican Interim Director of Financial Planning CFP®

Jonathan is a member of the Financial Planning Association of North Alabama and the Professional Partners in Philanthropy of the Community Foundation of Greater Birmingham. He was named to the 2020 Top 40 Under 40 by the Birmingham Business Journal.