Quick Read
Workers 50 or older who earned over $150,000 in 2025 Social Security wages must now put all 401(k) catch-up contributions into Roth accounts.
The mandatory Roth switch costs affected workers upfront deductions worth $1,900 to $2,700 per year, depending on age and catch-up amount.
Workers whose employer plan lacks a Roth option lose catch-up contributions entirely under SECURE 2.0, so verifying plan features is urgent.
Many financial professionals are salespeople paid on what they push, not whether you end up wealthier. A fiduciary is the opposite. The SEC legally requires them to put your interests first. Advisor.com’s free matching tool pairs you with vetted fiduciaries from major national firms, all in under three minutes. See who you match with today.
The rule took effect on January 1, and it changes how a specific slice of American workers save for retirement. If you are 50 or older and earned more than $150,000 in Social Security wages in 2025, any catch-up contribution you make to a 401(k) this year has to go into a Roth account. The pretax option that older, higher-income savers have relied on for years is no longer available to this group.
The threshold in the underlying law was originally set at $145,000, but it is adjusted annually for inflation, which is why the 2026 figure is $150,000. The number that matters is Box 3 on your 2025 W-2, which reports earnings subject to Social Security tax. Self-employment income on a 1099, or partnership income on a K-1, does not count toward the threshold, according to tax specialists cited by The New York Times.
What the Numbers Look Like in 2026
The standard employee deferral limit for a 401(k) this year is $24,500. Workers 50 and older can add a catch-up contribution of $8,000, for a total of $32,500. A separate “super” catch-up applies to workers aged 60 to 63, who can add $11,250 instead, bringing their total to $35,750. At age 64, the standard catch-up amount returns.
Are You Ready To Retire, Or Years Behind?
Most Americans suspect they’re behind on retirement and never find out. Advisor.com’s free matching tool pairs you in about three minutes with a vetted fiduciary advisor who can help you with investing, taxes, retirement, estate planning, and more. No minimums. No sales call. Find out where you stand.
The mechanical impact of the Roth requirement shows up on the paycheck. Under the prior rules, a 55-year-old in the 24% federal bracket who maxed the catch-up would have reduced their federal tax bill by roughly $1,900. Starting this year, that amount stays in taxable income. For a 62-year-old in the same bracket using the super catch-up, the lost upfront deduction is closer to $2,700, based on figures from the National Association of Tax Professionals.
