2026 Roth Catch-Up Mandate: If 2025 Wages Topped $150k

IRS & compliance｜September 2026

Why this matters today

Today is Friday, September 18, 2026. With roughly one quarter left in the calendar year, many employees and owners across Cary, Research Triangle Park (RTP), Raleigh, and Wake County are adjusting 401(k), 403(b), or governmental 457(b) deferrals.

Starting with tax year 2026, a key SECURE 2.0 rule applies in full: if your 2025 FICA wages from the employer that sponsors the plan exceeded $150,000, then age-50+ catch-up contributions to an applicable employer plan that offers Roth features generally must be designated as Roth (after-tax). See IRS.gov “Retirement topics – Catch-up contributions” (page last reviewed May 7, 2026) and Notice 2025-67 for the indexed $150,000 threshold.

This article is general information for a year-end checkup—not personalized tax or investment advice.

How this differs from our recent posts

- Sept 15–16: Estimated-tax deadlines and North Carolina Session Law FAQs—this piece does not restate state conformity

- Sept 17: IRS digitally authenticated Tax Compliance Report—a different proof-of-compliance tool

- Oct 15 track: Form 4868 / FBAR—extension and disclosure timelines

- This article: Who must use Roth catch-up in 2026, the dollar limits, and what to check before payroll elections close

1. The rule in one sentence

Look at prior-year FICA wages from that plan’s sponsoring employer.

For 2026 catch-ups: if 2025 FICA wages from that employer exceeded $150,000, catch-up amounts generally must be Roth.

Participants under the threshold may still choose pre-tax or Roth catch-up if the plan allows—always follow the plan document.

2. Key 2026 limits (non-SIMPLE)

From the IRS catch-up topics page:

- Elective deferral limit (401(k)/403(b)/governmental 457(b), etc.): $24,500

- Age 50+ catch-up: $8,000

- Ages 60–63 higher catch-up (SECURE 2.0): $11,250 (instead of $8,000)

- Amounts count as catch-up only after you exceed the regular deferral limit (or the ADP/plan limit, if lower)

- Catch-ups are made as elective deferrals and must be completed before the end of the plan year

SIMPLE plans use different caps (2026 catch-up generally $4,000; ages 60–63 $5,250, alongside the $17,000 salary-reduction context). IRA catch-up for 2026 is $1,100 and is not the same Roth-mandate regime—do not mix the rules.

3. Who should check now?

1. Employees age 50+ whose 2025 FICA wages from the plan sponsor may have exceeded $150,000

2. High earners in RTP / Cary tech, biotech, and consulting—plus S Corp owners who need to map which wages belong to which plan sponsor

3. Employers whose plans still lack Roth: for participants subject to mandatory Roth treatment, the catch-up limit can be $0 if the plan has no Roth feature. Sponsors should evaluate adding Roth and updating payroll coding

4. Three-step year-end checklist

1. Confirm 2025 FICA wages from that plan sponsor versus the $150,000 threshold (W-2 and plan administrator guidance).

2. Confirm the plan offers Roth catch-up and that payroll can code catch-ups as Roth.

3. Update 2026 deferral / catch-up elections before the plan year ends so pre-tax catch-up is not rejected or misclassified late in the year.

5. How YCL can help

YCL Accounting & Consulting in Cary / RTP, led with CPA Chenchen Liu and Gloria, helps clients read W-2s and plan notices, test whether mandatory Roth catch-up applies, coordinate plan and payroll settings on the employer side, and align year-end retirement elections with federal compliance.

Book a free consultation: https://www.yclcpa.com

Disclaimer

This article is for general education and website content only. It is not tax, legal, accounting, or investment advice for any specific person or business. Plan terms, wage definitions, and filing positions follow current IRS guidance, your plan documents, and advice from your own qualified professionals. Consult a CPA or plan administrator before changing deferral or Roth elections.