Overview
- Plans may adopt the change in 2026 under a reasonable, good-faith approach, and the requirement formally takes effect in 2027, according to the IRS.
- The IRS’s latest guidance sets the wage threshold for the Roth catch-up test at $150,000 for the 2025 lookback year, up from $145,000 previously cited.
- For 2026, the elective deferral limit rises to $24,500 and the standard catch-up limit increases to $8,000, with a $11,250 catch-up cap for ages 60–63.
- Workers over the threshold whose plans lack a Roth option will be unable to make catch-up contributions, though roughly 93% of plans offer Roth features.
- The shift trades an upfront tax bill for the potential of tax-free growth and withdrawals on these additional contributions in retirement.