This January, many workers in their 50s likely raised their eyebrows when they saw their first paycheck statement. The catch-up contribution amount for the 401k remains the same, but the way taxes are deducted has changed.

There's one reason for this. The Roth catch-up mandate from the SECURE 2.0 Act officially takes effect on January 1, 2026. The law was passed at the end of 2022, but the IRS delayed its implementation by two years, originally scheduled for 2024, to allow for a preparation period.

Let's quickly summarize the key points. If you are over 50 years old and your FICA wages from your current employer exceeded $150,000 in the previous year, you can only contribute to the catch-up as Roth.

FICA wages refer to the Social Security taxable wages listed in box 3 of the W-2 form. It's important to note that this is based on the W-2 figure, not the salary stated in your annual contract, which can be confusing.

So, whether the catch-up for 2026 will be Roth is determined by your 2025 W-2. It's based on last year's wages, not this year's salary.

The initial threshold set in the law was $145,000. However, due to inflation adjustments, the IRS raised it to $150,000 in Notice 2025-67 issued in November 2025.

This threshold will continue to change annually based on inflation. It's essential to develop a habit of checking the IRS announcements at the end of each year. You cannot assume the same number will apply next year.

So, what is the limit? The general 401k contribution limit for 2026 is $24,500, and the catch-up for those over 50 is $8,000, totaling $32,500.

If you are between 60 and 63 years old, the so-called super catch-up applies, allowing the catch-up to increase to $11,250. This does not add to the general catch-up but replaces it, resulting in a total of $35,750.

However, the super catch-up is an option that the company plan can choose to offer. You need to check if your company has included it.

The important thing is this: being a high-income earner does not reduce the catch-up amount. The limit remains the same; only the timing of when you pay taxes changes.

Why was this regulation created? From the government's perspective, allowing contributions as Roth means they can collect taxes now. It's generally analyzed as a provision to meet the budgetary requirements of the legislation.

To be frank, this means asking high-income earners to pay a bit more in taxes now. However, it's not a structure that only causes losses. If you meet the conditions, you can withdraw the principal and earnings from a Roth account tax-free later.

If you reside in Washington State, the calculations are a bit simpler. Since there is no state income tax, contributing to a Roth only saves you on federal income tax.

Conversely, if you plan to move to a state with a state income tax after retirement, the situation changes. Money accumulated in a Roth could actually be more advantageous.

There's one trap you shouldn't overlook. If the company plan does not have a Roth option at all, that high-income earner cannot make catch-up contributions.

That's why some companies have added a Roth option to their plans this year. Check your HR portal to see which way your company has gone.

Additionally, the final regulations allow plans to automatically treat excess contributions as Roth catch-up contributions after reaching the general limit.

In this case, you will be automatically converted without needing to apply separately. So, if you're wondering why there's a Roth item on your statement, this is likely the reason.

Some people are not eligible. Individuals who are self-employed or partners with only self-employment income without a company W-2 are not subject to this regulation.

Remember that the previous year's wage threshold is based on the employer in question. If you earned money at a different company last year, the calculations may differ, and you need to check how your plan handles job changers.

The IRS has set the official application of the final regulations for 2027. For 2026, it's a year to operate under a reasonable and good faith interpretation of the law's provisions.

However, don't be mistaken. The Roth catch-up mandate itself has not been delayed by a year. It has already been in effect since this year.

So, what should you do now? First, check the number in box 3 of last year's W-2. Second, see if your plan has a Roth option and super catch-up.

Third, before the end of the year, verify that this year's catch-up is being properly reflected on your paycheck statement. With only a few pay periods left by the end of October, now is the time to make adjustments.

If it were me, I wouldn't reduce my catch-up contributions. The tax treatment has changed, but the limit for contributions remains the same.

Instead, I see it as an opportunity to split retirement assets between pre-tax and Roth. This way, you have one more card to play when it comes time to withdraw.

Of course, the right answer varies depending on tax brackets, retirement timing, and moving plans. It's different for each individual situation, so be sure to check with a tax advisor or financial expert.

While the regulations may seem complex, the conclusion is simple. Check last year's W-2, confirm the Roth option, and continue to fill the catch-up.