Overview
- Under final IRS regulations, workers age 50 and older with prior-year wages above $145,000 from their current employer must make catch-up contributions to Roth accounts beginning in the 2026 tax year.
- Affected savers will forfeit the immediate deduction on these extra deferrals, shifting taxation to the year of contribution while retaining tax-free growth and withdrawals in retirement.
- Through 2025, eligible participants may still choose pretax or Roth for catch-ups, with a $23,500 standard deferral limit plus $7,500 for age 50+ and $11,250 for ages 60 to 63.
- Employees in plans that lack a Roth 401(k) feature may be unable to make catch-up contributions until their employer adds Roth capability.
- Roth access is expanding across plans—Fidelity reports Roth in 95% of plans it manages and Vanguard reports 86%—and advisors recommend running multi-year tax projections or accelerating pretax catch-ups in 2025.