Certain changes are coming to rules around Roth “Catch-up” contributions for participants over age 50.
A catch-up contribution is an extra, tax-advantaged contribution that individuals age 50 or older can make to their retirement accounts, such as a 401(k) or IRA, above the standard annual limit. The latest IRS regulations require that starting in 2026, catch-up contributions for participants in 401(k) with prior-year wages over $145,000 must be made as Roth (after-tax) contributions. This does not apply to SIMPLE IRAs or SEPs. Plans are not required to offer a Roth feature, but if they do not, high-wage participants cannot make catch-up contributions once the rule is effective.
Employers that do not currently offer Roth contribution options will need to amend their plans to allow Roth catch-up contributions for high-wage earners, or else those participants will be unable to make catch-up contributions after the transition period ends on December 31, 2025.
Please contact your third-party administrator (TPA) for more information. Or, if you prefer, please let us know and we would be happy to help answer any questions.