If you’re over 50, you’ve probably appreciated the ability to make “catch-up” contributions to your 401(k). That extra $7,500 (on top of the standard $23,000 in 2025) gives you a valuable boost toward retirement savings.
But starting in 2026, there’s a big change on the horizon: if you earn more than $145,000, your catch-up contributions can no longer go into a traditional 401(k). They must go into a Roth 401(k).
This rule was delayed a year from its original 2024 start date, but now it’s official—and it could reshape how many high-income professionals think about retirement saving.
What’s Changing
- Who’s affected? Anyone age 50+ earning more than $145,000 (indexed for inflation).
- What’s changing? Instead of being able to choose between pre-tax (traditional) and after-tax (Roth) catch-up contributions, you’ll only be allowed to make Roth catch-ups.
- When does it start? 2026.
This means those extra contributions will be made with after-tax dollars, growing tax-free over time, but you’ll lose the upfront tax deduction that came with traditional contributions.
Why the IRS Made This Change
The short answer? Revenue. By requiring high earners to use Roth accounts for catch-ups, the government collects more tax dollars today instead of letting you defer them until retirement.
But there’s a silver lining: once the money is in your Roth401(k), it grows tax-free and can be withdrawn tax-free in retirement—so in the long run, this could still be a positive for many investors.
What This Means for Your Retirement Strategy
- Bigger Tax Bills Now
If you’ve been relying on the deduction from traditional catch-ups to lower your taxable income, you’ll lose that benefit starting in 2026.
- Tax Diversification Later
Many high earners end up too heavily weighted toward pre-tax accounts (traditional 401(k)s, IRAs, pensions). Roth savings create more flexibility in retirement, since withdrawals don’t increase taxable income. Roth savings also don’t have a Required Minimum Distribution.
- Plan Around Cash Flow
For business owners, doctors, and executives, losing the tax deduction could mean higher current tax bills. Planning for cash flow today can help you still take full advantage of the Roth contribution tomorrow.
- Legacy and Estate Benefits
Roth accounts are also more efficient for wealth transfer. Since withdrawals are tax-free, heirs don’t have to worry about large taxable distributions
What You Can Do Now
- Review your contribution strategy for 2025. You still have one more year to make pre-tax catch-up contributions.
- Consider increasing Roth contributions now. If tax rates rise in the future, today’s Roth contributions may actually look like a bargain.
- Coordinate with your CPA and financial advisor. Tax planning will be critical in deciding how to balance pre-tax vs. Roth contributions.
Final Thoughts
This change highlights an important truth: tax laws are always evolving, and your retirement plan needs to evolve with them. While losing the option for pre-tax catch-up contributions may feel like a drawback, Roth savings offer long-term benefits that shouldn’t be overlooked.
The key is not just saving more—but saving smarter, in a way that prepares you for both today’s tax picture and tomorrow’s retirement needs.
