Updated for 2026
Every figure below is the 2026 number, from Notice 2025-67. The headline change is not a number at all: 2026 is the first year the catch-up contribution has to be Roth for anyone who earned more than $150,000 in 2025 from the employer sponsoring the plan.
- The 401(k) elective deferral limit is $24,500 for 2026, and the age-50 catch-up is $8,000.
- If your 2025 Social Security wages from that employer exceeded $150,000, the entire catch-up must be designated Roth. The two-year grace period is over.
- The IRA limit rises to $7,500, and the IRA catch-up is indexed for the first time, to $1,100.
- The ages 60–63 catch-up is frozen at $11,250, so the premium over the ordinary catch-up narrows to $3,250.
The annual contribution-limit article is normally a list. This year it is a list plus one rule that changes where the money goes, and the rule is easy to miss because it does not appear in any of the tables.
If you are fifty or older and well paid, your 2026 catch-up is probably no longer a deduction. It is still a contribution, and it still grows, but it comes out of after-tax pay. That is a real cash-flow difference in a year when nothing about your salary changed, and it is the part worth reading carefully before your first payroll of the year runs the way it ran last year.
The change that actually matters
Section 414(v)(7), added by the SECURE 2.0 Act, says that a catch-up-eligible participant whose prior-year wages from the employer sponsoring the plan exceeded an indexed threshold may only make catch-up contributions as designated Roth contributions. Notice 2025-67 sets that threshold precisely:
“The Roth catch-up wage threshold for 2025, which under section 414(v)(7)(A) is used to determine whether an individual’s catch-up contributions to an applicable employer plan … for 2026 must be designated as Roth contributions, is increased from $145,000 to $150,000.”
The requirement was written to start in 2024. Notice 2023-62 then created an administrative transition period covering the first two taxable years beginning after December 31, 2023 — 2024 and 2025 — during which a pre-tax catch-up was treated as satisfying the rule anyway. That period has ended. 2026 is the first year the statute bites.
What this looks like on an actual return
If you read nothing else, read this. Same person, same salary, one year apart.
A 55-year-old employee earning $300,000 in W-2 wages, contributing the maximum to a 401(k) that offers a Roth option.
| On the paycheck | 2025 | 2026 |
|---|---|---|
| Elective deferral limit | $23,500 | $24,500 |
| Catch-up, age 50 or older | $7,500 | $8,000 |
| Total going into the plan | $31,000 | $32,500 |
| Of that, required to be Roth | $0 | $8,000 |
| Pre-tax deferral — the part that reduces taxable wages | $31,000 | $24,500 |
$6,500 less of the contribution is deductible, on identical facts. At a 35% marginal federal rate that is roughly $2,275 more federal tax in 2026, before any state tax. In New York City the combined effect on that dollar is closer to $3,000.
The one-line version. The money is not lost — it moves from a deduction today to tax-free growth later. What disappeared is the deduction, and it disappeared from this year’s cash flow without anyone sending you a letter. Figures are illustrative and rounded.
Who is actually caught by the Roth catch-up rule
The test is narrower than most summaries suggest, and the details decide the answer for a lot of people.
It is measured on Box 3, not on your tax return. The final regulations tie the test to FICA wages reported in Box 3 of Form W-2 for the preceding calendar year. Not adjusted gross income, not household income, not total compensation. Investment income, rental income and a spouse’s salary are all irrelevant.
It is measured employer by employer. Wages are not aggregated across unrelated employers. Someone who changed jobs in October 2025 may have a small Box 3 figure from the new employer and is not subject to the requirement in that plan for 2026, no matter what the two jobs paid together.
No FICA wages means no requirement. A partner whose only compensation is a guaranteed payment has self-employment income, not FICA wages. The regulations are explicit that a participant with no FICA wages from the sponsoring employer for the preceding year is not subject to the Roth catch-up requirement. Partners in law and medical practices are the clearest example, and it is the most commonly misapplied part of the rule.
It does not reach SEP or SIMPLE plans. The statute applies to applicable employer plans other than those described in section 408(k) or 408(p). It covers 401(k), 403(b) and governmental 457(b) plans.
If the plan has no Roth option, the catch-up may simply go away. A plan that offers catch-up contributions has to make a Roth catch-up available to everyone eligible once any participant is subject to the requirement. A plan without a Roth feature is permitted instead to bar affected participants from making catch-up contributions at all. That is worth confirming with your plan administrator before you assume the room is there.
For 2026, the fine print is not yet binding. The final regulations generally apply to contributions in taxable years beginning after December 31, 2026. For 2026 itself, a reasonable, good-faith interpretation of the statute is the standard. The obligation is live; the detailed mechanics become mandatory a year later.
The wage test is narrower than it looks. It reads Box 3 wages from the employer sponsoring the plan, and does not add wages across employers — so a mid-2025 job change can change the answer. Ask us where you land.
Workplace retirement plans in 2026
| 401(k), 403(b), governmental 457(b) | 2025 | 2026 |
|---|---|---|
| Elective deferral limit — section 402(g) | $23,500 | $24,500 |
| Catch-up, age 50 or older | $7,500 | $8,000 |
| Catch-up, ages 60 through 63 | $11,250 | $11,250 |
| Roth catch-up wage threshold (prior-year Box 3 wages) | — | $150,000 |
| Total annual additions — section 415(c) | $70,000 | $72,000 |
| Compensation that can be counted — section 401(a)(17) | $350,000 | $360,000 |
| Highly compensated employee threshold | $160,000 | $160,000 |
| Key employee officer threshold | $230,000 | $235,000 |
| Defined benefit annual limit — section 415(b) | $280,000 | $290,000 |
| Social Security wage base | $176,100 | $184,500 |
Two lines deserve a second look. The ages 60 through 63 catch-up stayed at $11,250 while the ordinary catch-up rose, so the premium for being in that four-year window shrank from $3,750 to $3,250. And the section 415(c) limit of $72,000 is the ceiling on everything — your deferral, the employer match, profit sharing and after-tax contributions combined — which is the number that governs a mega-backdoor Roth strategy rather than the $24,500 deferral limit.
IRAs and Roth IRAs in 2026
| 2025 | 2026 | |
|---|---|---|
| IRA contribution limit | $7,000 | $7,500 |
| IRA catch-up, age 50 or older | $1,000 | $1,100 |
| Traditional IRA deduction phases out — single, covered by a workplace plan | $79,000–$89,000 | $81,000–$91,000 |
| Traditional IRA deduction phases out — joint return, contributor covered | $126,000–$146,000 | $129,000–$149,000 |
| Traditional IRA deduction phases out — joint return, only the spouse covered | $236,000–$246,000 | $242,000–$252,000 |
| Roth IRA eligibility phases out — single or head of household | $150,000–$165,000 | $153,000–$168,000 |
| Roth IRA eligibility phases out — married filing jointly | $236,000–$246,000 | $242,000–$252,000 |
| Saver’s credit — income ceiling, joint return | — | $80,500 |
The IRA catch-up moved for the first time since it was written into the Code. It had been a flat $1,000 since 2006; SECURE 2.0 indexed it, and 2026 is the first year the index actually produced an increase.
Self-employed and small-business plans
| 2025 | 2026 | |
|---|---|---|
| SEP-IRA maximum contribution | $70,000 | $72,000 |
| SEP compensation threshold to be covered | $750 | $800 |
| SIMPLE elective deferral | $16,500 | $17,000 |
| SIMPLE deferral, smaller employers — section 408(p)(2)(E)(i) | $17,600 | $18,100 |
| SIMPLE catch-up, age 50 or older | $3,500 | $4,000 |
| SIMPLE catch-up, ages 60 through 63 | $5,250 | $5,250 |
The SEP is still capped at the lesser of 25% of compensation or the section 415(c) figure, so the $72,000 headline requires around $288,000 of compensation to reach. A solo 401(k) gets to the same ceiling on far less income, because the employee deferral is not a percentage of anything. We work through that comparison in SEP-IRA versus solo 401(k) and in self-employed retirement planning.
Health savings accounts in 2026
| 2025 | 2026 | |
|---|---|---|
| HSA contribution — self-only coverage | $4,300 | $4,400 |
| HSA contribution — family coverage | $8,550 | $8,750 |
| HSA catch-up, age 55 or older | $1,000 | $1,000 |
| High-deductible plan — minimum deductible, self-only | $1,650 | $1,700 |
| High-deductible plan — minimum deductible, family | $3,300 | $3,400 |
| High-deductible plan — maximum out-of-pocket, self-only | $8,300 | $8,500 |
| High-deductible plan — maximum out-of-pocket, family | $16,600 | $17,000 |
The HSA catch-up is $1,000 and is not indexed — it is a fixed figure in section 223(b)(3) and has not moved since 2009. Note also that it is per person, so a married couple both aged 55 or older need two accounts to claim both catch-ups. The HSA remains the only account that is deductible going in, untaxed while it grows, and untaxed coming out for medical costs.
Gifts and 529 plans
The annual gift tax exclusion is $19,000 per recipient for 2026, unchanged from 2025. The five-year election under section 529(c)(2)(B) still lets a donor front-load five years of exclusions into one contribution, which is $95,000 per beneficiary for 2026, or $190,000 from a married couple electing to split gifts. The basic exclusion amount for estate and gift tax is $15,000,000 for 2026.
What to do about it
- If you turned 50 or will in 2026 and earned over $150,000 in 2025, look at your Box 3 figure on last year’s W-2 first. That single number decides whether the rule applies to you, and it is not always what you would guess from your total compensation.
- Confirm your plan has a Roth option before you rely on the catch-up. If it does not, a plan is allowed to remove catch-up contributions entirely for affected participants rather than add one.
- Revisit your withholding early in the year. Losing $8,000 of pre-tax deferral raises taxable wages by that amount. Payroll usually adjusts automatically; estimated payments for other income do not.
- If you are 60 to 63, the window is still worth using. $11,250 instead of $8,000, and it is $3,250 of additional room that closes permanently the year you turn 64.
- Partners: check whether you have any Box 3 wages at all. If your compensation is entirely guaranteed payments, the requirement does not reach you, and a pre-tax catch-up is still available.
- Above the Roth IRA phase-out, the backdoor route still works — but the pro-rata rule in section 408(d)(2) aggregates every traditional, SEP and SIMPLE IRA you own when measuring the taxable portion of a conversion. A funded SEP makes it expensive.
- Do not overfund. Excess deferrals corrected after April 15 of the following year are taxed twice, and excess IRA contributions carry a 6% excise tax for every year they stay in the account.
Frequently asked questions
I earned more than $150,000 last year. Does the Roth catch-up rule really apply to me in 2026?
Yes, if that figure is Social Security wages in Box 3 of a Form W-2 from the employer sponsoring your plan, and you are eligible to make catch-up contributions in 2026. The administrative transition period created by Notice 2023-62 covered only the first two taxable years beginning after December 31, 2023, which were 2024 and 2025. It has expired. What is still flexible in 2026 is the fine print: the final regulations generally apply to contributions in taxable years beginning after December 31, 2026, and until then plans apply a reasonable, good-faith interpretation of the statute.
Which wages count toward the $150,000?
FICA wages for the preceding calendar year from the employer that sponsors the plan, as reported in Box 3 of Form W-2. Adjusted gross income does not matter. A spouse’s income does not matter. Wages from an unrelated employer are not added in, which is why someone who changed jobs partway through 2025 can be under the threshold at the new employer even after a large total year.
I am a partner in a partnership. Am I subject to it?
If your compensation from the partnership is guaranteed payments and distributive share, you have self-employment income rather than FICA wages, and the final regulations state that a participant with no FICA wages from the sponsoring employer for the preceding year is not subject to the Roth catch-up requirement. Your pre-tax catch-up survives. This is worth checking rather than assuming, because some partners also receive W-2 wages from an affiliated management company.
What if my plan does not offer a Roth option?
Once any participant is subject to the requirement, a plan that permits catch-up contributions must make Roth catch-up contributions available to every catch-up-eligible participant. A plan that does not want to add a Roth feature is permitted to take the other path and stop allowing catch-up contributions for the affected participants. Ask the administrator which one your plan chose before you set your deferral election for the year.
How do the ages 60 to 63 catch-up and the Roth requirement interact?
They stack. If you are 62 and over the wage threshold, your catch-up limit is $11,250 rather than $8,000, and the whole $11,250 has to be designated Roth. The higher limit applies for the years you attain age 60, 61, 62 or 63 and stops in the year you reach 64, at which point you drop back to the ordinary catch-up.
Can I still deduct a traditional IRA contribution?
If neither you nor your spouse is covered by a workplace plan, the full $7,500 is deductible regardless of income. If you are covered, the deduction phases out between $81,000 and $91,000 of modified adjusted gross income filing single, and between $129,000 and $149,000 on a joint return. If only your spouse is covered, your own deduction phases out between $242,000 and $252,000. Above those ranges the contribution is still permitted, it is simply not deductible — which is where the backdoor Roth conversation usually starts.
Related reading
- Self-employed retirement planning: a step-by-step guide
- SEP-IRA vs. solo 401(k): which is better?
- How to max out a small-business retirement plan
- Best retirement plans for solo law firms and medical offices
- The SALT deduction cap: what it is now and who loses it
- Deducting health insurance as a self-employed professional
- What is a reasonable salary for an S corporation owner?
- The QBI deduction for self-employed professionals
- Getting the most out of an employee stock purchase plan
- Individual tax preparation and planning
- Bookkeeping and financial reporting
Not sure which of these applies to you
We work through the deferral election, the plan document and the withholding together, before the first payroll of the year locks it in. We can work with you in any state, and most of our clients have never been to the office.
This article is general information, not advice for a particular taxpayer. Figures apply to the 2026 tax year and to the 2025 comparison year where shown. Primary sources: IRS Notice 2025-67 (retirement plan limitations for 2026), Rev. Proc. 2025-19 (2026 HSA and high-deductible plan amounts), Rev. Proc. 2025-32 (2026 inflation adjustments, including the gift tax exclusion), final regulations on catch-up contributions (T.D. 10033), IRS Notice 2023-62 (the administrative transition period), 26 U.S.C. § 414(v), and the Social Security wage base published by the Social Security Administration.
