If you've received an email from your employer, or retirement plan provider, about Roth catch-up contributions, you might be wondering the same thing we've been hearing from our clients: Do I need to do anything?
For most employees, the answer is no. Depending on your employer and retirement plan, the required changes may happen automatically. But even if you don't need to take action, its still worth understanding what the new rules mean for your retirement savings.
Let's walk through what's changing, who it affects, and what you should know.
What is the Roth Catch-Up Requirement?
Beginning in 2026, a provision of the SECURE 2.0 Act requires certain higher-income employees to make their retirement plan catch-up contributions on a Roth basis. Before SECURE 2.0, eligible employees could make their catch-up contributions on a pre-tax basis, thus further reducing their taxable income for the year.
The rule applies if you...:
- Are age 50 or older and eligible to make catch-up contributions
- Had more than $150,000 in FICA wages from the employer sponsoring the plan in the previous year (this number will be indexed and change year-to-year)
- Want to contribute more than the regular annual employee contribution limit to your workplace retirement plan.
Please note, FICA wages are the wages generally used to calculate Social Security and Medicare taxes. They're not necessarily the same as your adjusted gross income (AGI), total household income, or gross salary. For reference, see Form W-2's Box 3 (wages for Social Security taxation purposes).
There is an important distinction to make here though. This rule only affects catch-up contributions above the regular annual limit. It does not require you to change all your contributions to Roth.
Do I Need to Do Anything?
As mentioned before, for most employees this change is handled automatically.
For example, across the University of Texas System institutions that we work with, the transition is handled automatically regardless of whether the plan is administered by Lincoln, Voya, Corebridge, TIAA, or Fidelity.
If you're an eligible employee whose prior-year wages exceeded the $150,000 threshold for 2026's contributions, your plan will automatically direct your catch-up contributions to the Roth portion of your account once you reach the applicable regular contribution limit.
However, don't assume every employer handles this the same way. If you work outside the UT System or aren't sure how your plan is set up, contact your HR or benefits department and/or retirement plan provider to confirm the change is automatic.
If you're not eligible for catch-up contributions, or you don't contribute up to and beyond the regular annual limit, you may not notice any immediate change.
How Could This Affect Your Return or Paycheck?
This is the part worth paying attention to, particularly as we approach the end of the year and employees get closer to their retirement plan contribution limits.
Traditional pre-tax contributions generally reduce your taxable income for the year. Roth contributions, on the other hand, are made with money that's already subject to income tax.
Here's a simplified example.
Imagine you're over age 50, your prior-year FICA wages exceeded the applicable threshold, and you've been contributing to your workplace retirement plan on a pre-tax basis throughout the year.
As your contributions reach the plan's regular annual limit, you want to continue saving through additional catch-up contributions.
Under the new rule, those additional contributions must be Roth rather than pre-tax. If your plan automatically makes that transition, you may not need to change your elections. However, because those contributions no longer reduce your taxable income, you could see a decrease in take-home pay compared with making the same contributions on a pre-tax basis.
Your taxable income for the year may also be higher than it would have been if those contributions were pre-tax.
The actual impact depends on your circumstances, but it's something to keep in mind when planning your contributions and budgeting for the remainder of the year.
Should You Be Making Roth Catch-Up Contributions?
If the requirement applies to you, Roth catch-up contributions aren't optional if you want to continue making those contributions under the rule. However, it's still worth considering how Roth savings fit into your broader retirement strategy.
With traditional pre-tax contributions, you generally receive the tax benefit today and pay taxes on withdrawals in retirement. With Roth contributions, you pay taxes on the money now, but qualified withdrawals—including investment growth—can be tax-free.
Neither approach is automatically better for everyone. Your current tax situation, expected income and sources of income in retirement, and overall financial situation can all factor into the decision.
You don't need to overhaul your entire retirement strategy because of this change. But if you're approaching the regular contribution limit, it's a good opportunity to review how you're saving and whether your current approach still makes sense.
The Bottom Line
If you've received a notice about Roth catch-up contributions, don't panic. For many employees, the transition is automatic, and no action is required to continue making eligible catch-up contributions.
Still, you should confirm how your plan handles the change, especially if you're unsure whether your contributions will automatically switch from pre-tax to Roth. Your HR department or retirement plan provider can help clarify what applies to your situation.
And remember, the change doesn't affect everyone. If you're not making catch-up contributions, you may not see any immediate impact.
If you have questions about how your workplace retirement benefits fit into your broader financial plan, I'd be happy to talk through them with you. You can schedule a introductory meeting with me below, and we can discuss your situation and any questions you may have.
This material is provided for general informational and educational purposes only and is not intended as individualized investment, tax, or legal advice. Retirement plan provisions and administrative procedures vary by employer and plan. Tax laws and retirement plan rules are subject to change. Consult your employer or plan administrator regarding your specific plan and a qualified tax or legal professional regarding your individual circumstances. Roth distributions are generally federally income-tax-free when applicable requirements are satisfied.