New Secure 2.0 Act Changes in 2026

Starting January 1, 2026, a new rule under the SECURE 2.0 Act will impact how certain employees can make catch-up contributions to their retirement plans.

What’s Changing?

If you’re turning age 50 or older in 2026 and your total 2025 FICA wages (Box 3 of your W-2)¹ with your current employer were more than $150,000*, any catch-up contributions you make in 2026 must be made on a Roth basis.

What this means for you:

Starting in 2026, your retirement plan will treat catch-up contributions as Roth for participants whose 2025 FICA wages exceed $150,000* in the prior year. This is considered a deemed Roth election under the Roth catch-up requirement.

If your 2025 FICA wages were over $150,000*, any catch-up contributions over the applicable plan limit you make in 2026 must be made on a Roth basis.

If your FICA wages were $150,000* or less, your catch-up contribution may be pre-tax or Roth, depending on your plan options.

Why this matters:

Roth contributions are after-tax deductions, which means:

• You pay taxes on the money you contribute now, but when you take a qualified distribution^‡, you will not owe taxes on that money or any attributable earnings.
• Your retirement savings strategy and tax planning may be impacted, including potential changes to your net take-home pay.
• Because Roth contributions do not lower your taxable wages, you may see a decrease in your take-home pay compared to previous years when catch-up contributions were pre-tax.