2026 Mandatory Roth Catch-Up Contributions for Higher Earners: What the New Rules Mean for Retirement Savers

Beginning in 2026, higher-earning workers will be required to make all retirement plan catch-up contributions on a Roth (after-tax) basis. This rule, created under SECURE Act 2.0, applies to individuals earning above a specific wage threshold and affects 401(k), 403(b), and governmental 457(b) plans. Our analysis at Greenbush Financial Group shows that while the change increases current taxable income, it can also create meaningful long-term tax benefits if planned correctly. This article explains who is impacted, how the rule works, and what planning steps to consider before 2026.

What Is the Mandatory Roth Catch-Up Rule in 2026?

The mandatory Roth catch-up rule requires certain high earners to make all catch-up contributions as Roth contributions, rather than pre-tax.

Under prior rules, employees age 50 and older could choose whether catch-up contributions were pre-tax or Roth. Starting in 2026, that choice is removed for higher earners.

At Greenbush Financial Group, this is one of the most common sources of confusion we see among pre-retirees who are aggressively saving in the final working years.

Who Is Subject to Mandatory Roth Catch-Up Contributions?

The rule applies if both of the following are true:

• You are age 50 or older

• Your prior-year wages exceed $150,000, indexed for inflation

• Wages are based on W-2 compensation

• Income from self-employment or investments does not count toward this threshold

If your wages are at or below the threshold, you may still choose between pre-tax or Roth catch-up contributions.

Which Retirement Plans Are Affected by the Rule?

Mandatory Roth treatment applies to catch-up contributions made to:

• 401(k) plans

• 403(b) plans

• Governmental 457(b) plans

It does not apply to:

• IRAs (Traditional or Roth)

• SEP IRAs

• SIMPLE IRAs (which follow separate contribution rules)

Catch-Up Contribution Limits for 2026

While final IRS-indexed numbers will be confirmed closer to 2026, current rules provide context for how the change applies.

General framework:

• Standard elective deferral limit (under age 50): indexed annually

• Catch-up contributions (age 50+): additional amount above the standard limit

• Ages 60–63: enhanced catch-up limits under SECURE Act 2.0, also subject to Roth-only treatment for higher earners

Our analysis at Greenbush Financial Group suggests that many high earners will still benefit from maximizing these Roth catch-up dollars despite losing the immediate tax deduction.

Why Congress Implemented the Mandatory Roth Requirement

The shift to Roth catch-up contributions serves two primary purposes:

• Increases near-term tax revenue for the federal government

• Expands long-term tax-free retirement savings for participants

Because Roth contributions are taxed upfront, the rule accelerates tax collection while potentially reducing future required minimum distributions.

Tax Impact: Higher Income Today, Lower Taxes Later

Mandatory Roth catch-ups create a trade-off.

Short-term impact:

• Higher taxable income

• Reduced ability to lower current-year tax bills

Long-term benefits:

• Tax-free growth

• Tax-free withdrawals in retirement

• Reduced exposure to future tax rate increases

• Potentially lower Medicare IRMAA and Social Security taxation later in life

At Greenbush Financial Group, we often see this rule align well with broader Roth conversion strategies already being implemented for higher-income households.

Employer and Plan Administration Considerations

Employers must ensure their retirement plans are properly updated to allow Roth catch-up contributions.

Key considerations:

• Plans that do not allow Roth contributions may need amendments

• Failure to comply could eliminate the ability to make catch-up contributions entirely

• Payroll and recordkeeping systems must track Roth-only catch-ups correctly

This is an important operational issue for both employers and employees to confirm well before 2026.

Planning Strategies Before 2026

There is still time to plan proactively.

Strategies to consider:

• Evaluating partial Roth conversions during lower-income years

• Coordinating catch-up contributions with overall tax bracket management

• Reviewing whether employer plans are Roth-enabled

According to guidance from the Internal Revenue Service, compliance will be strictly tied to wage reporting, making advance planning essential.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

Frequently Asked Questions About Mandatory Roth Catch-Up Contributions

1. What is the mandatory Roth catch-up rule starting in 2026?
   It requires higher-earning employees age 50+ to make all retirement plan catch-up contributions on a Roth (after-tax) basis.
2. What income level triggers mandatory Roth catch-ups?
   The rule applies to individuals with prior-year W-2 wages above $150,000 (2025 amount), indexed for inflation.
3. Does this rule apply to IRAs?
   No. The mandatory Roth catch-up requirement only applies to employer retirement plans, not IRAs.
4. Can I still make pre-tax contributions if I’m a high earner?
   Yes. The rule only affects catch-up contributions; standard employee deferrals may still be pre-tax.
5. What happens if my employer’s plan doesn’t offer Roth contributions?
   If Roth contributions are not available, catch-up contributions may not be permitted until the plan is amended.
6. Is mandatory Roth catch-up a bad thing for retirees?
   Not necessarily. While taxes may increase today, Roth catch-ups can significantly reduce taxes in retirement if used strategically.