When your 401(k) catch-up must go into Roth, and what changes in 2027
The rule began in 2026: for workers 50 and older who earned more than a set amount from their employer the year before, catch-up contributions must go in as Roth. The detailed regulations apply from 2027, and some plans will not take catch-ups at all.
A rule from the SECURE 2.0 Act changes how a certain group of older workers saves in a workplace plan. If you are 50 or older and earned more than a threshold in wages from your employer the previous year, any catch-up contribution you make must be a Roth contribution: after-tax, with no deduction up front.
The requirement generally began on 1 January 2026. The IRS’s earlier administrative transition relief ended on 31 December 2025, and for 2026 plans are expected to follow a reasonable, good-faith reading of the statute. That is a standard for how plans comply, not a year in which the rule was optional. The final regulations, which spell out the details, generally apply beginning in 2027, with later dates for certain governmental and collectively bargained plans.
| Who | Participants 50 or older in a 401(k), 403(b) or 457(b) plan whose prior-year wages from that employer exceeded the threshold. |
|---|---|
| 2026 threshold | $150,000 of prior-year (2025) wages, indexed from $145,000 in the law. |
| 2027 threshold | Indexed again, and based on 2026 wages. At checking time the IRS had not published it; some outside estimates say $155,000. Treat that as unconfirmed. |
| Which wages | Social Security (FICA) wages, Box 3 of the W-2, from the employer sponsoring the plan. Generally not combined across employers; the final regulations allow aggregation in specified cases, such as related employers or a common paymaster. |
| Self-employment income | Does not count. A sole proprietor or partner with no W-2 wages from the plan is outside the Roth-only rule. |
| What changes | Catch-up contributions must be Roth. Regular contributions are unaffected and may still be pre-tax. |
| If the plan has no Roth option | Affected workers cannot make catch-up contributions. A plan is not required to add Roth. |
| 2026 catch-up limits | $8,000 for 50 and older, $11,250 instead of that for ages 60 through 63. |
Why the test is narrower than it sounds
Three details decide whether the rule applies, and each one is easy to get wrong.
It looks backward. Your status for a given year depends on what you earned the year before, so a raise this year does not change this year’s treatment, and a drop in pay does not retroactively exempt you.
It is employer by employer. The test uses wages from the employer that sponsors the plan, and wages from separate employers are generally not added up. The final regulations make exceptions in specified situations, such as related employers or a common paymaster, so the plan administrator is the place to ask. Someone who changed jobs mid-year is measured against the new employer’s plan using the pay that employer reported.
It counts W-2 wages only. Box 3 of the W-2 is the reference. Investment income and self-employment income are not part of the test, which is why a business owner reporting on Schedule C or a K-1 is outside the Roth-only requirement even when total income is high.
Also on The Second Half Guide The airport help you’re entitled to, and nobody mentions Wheelchairs, escorts through the terminal, help through security — all free and yours by law. Almost entirely unused, because nobody tells you. Read it →The rule does not ask how much you earn. It asks how much your plan’s sponsor paid you in FICA wages last year.
Box 3 is not Box 1
The two wage boxes on a W-2 can differ by thousands of dollars for exactly the people this rule is about. Box 1 is taxable wages, which is reduced by pre-tax 401(k) deferrals. Box 3 is Social Security wages, which is not: elective deferrals count as FICA wages. An employee paid $160,000 who put $24,500 into a pre-tax 401(k) shows about $135,500 in Box 1 and $160,000 in Box 3, before any other payroll adjustments. The regulations use the Box 3 figure, so a person can look below the line on Box 1 and still be above it. The test is wages that exceed the threshold: someone at exactly $150,000 in 2025 is not over it for 2026.
What stays the same
The rule is about the type of catch-up contribution, not the amount. The regular annual deferral limit, $24,500 in 2026, is unaffected, and it can still be pre-tax. Only the extra amount allowed at 50 and older is redirected to Roth for those over the line. Workers below the threshold keep whatever choice their plan already gave them. A Roth catch-up gives up the upfront income-tax exclusion that a pre-tax contribution carries, and qualified withdrawals later are tax-free. That does not mean the lifetime tax bill comes out the same, and the rule does not raise the amount that may be contributed. The 2026 figures above are labeled as 2026; the 2027 limits had not been officially published when this was checked.
The 60–63 window and the plan that has no Roth
The higher catch-up for ages 60 through 63, covered in the piece on the four-year window, runs through the same rule. A worker in that age range above the wage threshold can still use the larger amount, but only as Roth, and only if the plan allows it.
The plan option matters more than it first appears. Plans are not required to offer Roth deferrals. If yours does not and does allow catch-up contributions, workers over the threshold are effectively shut out of them, while workers under it are not. Whether a given plan will add a Roth feature is a decision for its sponsor, and the answer will be in the plan’s own materials.
What to check
- Find Box 3 of last year’s W-2 from the employer that sponsors the plan. That is the number the test uses, not Box 1.
- Compare it with the threshold for the contribution year. For 2026 it is $150,000; for 2027, wait for the IRS figure rather than relying on an estimate.
- Ask the plan administrator whether the plan offers a Roth option and how it will handle catch-up contributions.
- If you are self-employed or a partner with no W-2 wages from the plan, the Roth-only rule does not apply to you.
- A Roth catch-up is not deducted when contributed, so take-home pay can differ from a pre-tax contribution of the same size.
For most workers 50 and older the rule changes nothing. For those above the line it changes the form the contribution takes, and for those whose plan has no Roth option it decides whether they can make one at all.
This is general information, not personal financial, tax or legal advice. We report the rules, the numbers and the deadlines as clearly as we can. Your income, filing status, state and account types can all change how a rule applies to you, so treat this as a good place to find the right questions, not a substitute for a tax or financial professional looking at your actual return.
Where these facts come from
Checked on 3 October 2026 against the sources listed below. Dollar limits and program rules change — if you're reading this well after that date, verify the numbers at the links below.
- Trucker Huss — The Roth Catch-Up Regulations Are Final — https://www.truckerhuss.com/newsletter/roth-catchup-regulations/
- Kahn Litwin — IRS, Treasury issue final regulations on Roth catch-up contributions under SECURE 2.0 — https://kahnlitwin.com/blogs/tax-blog/irs-treasury-issue-final-regulations-on-roth-catch-up-contributions-under-secure-2-0
- Voya — IRS issues final regs on mandatory age 50+ Roth catch-up and increased catch-up contributions — https://www.voya.com/voya-insights/irs-issues-final-regs-mandatory-age-50-roth-catch-and-increased-catch-contributions
- CAPTRUST — Mandatory Roth Catch-Up Q&A — https://www.captrust.com/resources/mandatory-roth-catch-up-qa/
- NAPA — 2027 Retirement Contribution Limits Come into Focus — https://www.napa-net.org/news/2026/9/2027-retirement-contribution-limits-come-into-focus/
Edward Silva
Edward spent more than forty years as a computer professional — long enough to pick up one useful occupational habit: when somebody hands you a summary, go and read the actual documentation. He started The Second Half Guide after noticing that most writing aimed at people his age was either talking down to him or quietly selling him something, and that the plain facts — the dates, the thresholds, the dollar figures — were somehow the hardest part to find.
He's married, with two grown sons, both married themselves. He is not a financial adviser, an attorney or an insurance agent, and this site doesn't tell you what to do with your money. It tells you what the rules actually say, and links to where he checked.