If you are over age 50 and expect your income to exceed $145,000 (based on prior-year wages), there is an important retirement planning reminder to be aware of as you head into 2026.
This change does not reduce how much you can save — but it does affect how certain contributions must be made and how your payroll system may handle them.
What’s changed under current IRS rules
For individuals over age 50 with income above the IRS threshold:
- Catch-up contributions (the extra amount allowed beyond the standard retirement plan limit)
- Must be contributed as Roth if your employer plan offers a Roth option
This applies to 401(k), 403(b), and 457 plans
Many high-income earners are already ineligible to contribute directly to a Roth IRA, which makes the employer plan one of the few remaining ways to build Roth savings.
What has not changed
- You can still contribute the maximum allowed pre-tax amount
- You are not losing contribution space
- You may still use a combination of pre-tax and Roth inside your employer plan
The key distinction is that catch-up dollars must be Roth, while the base contribution can remain pre-tax.
Why this creates confusion
Not all payroll systems administer this rule the same way. Depending on your employer:
- Some plans allow a true split, where pre-tax and Roth contributions occur throughout the year
- Others automatically fund pre-tax first, then switch to Roth later in the year once the pre-tax limit is reached
Both approaches can be correct — but only if the plan is set up properly.
A critical employer match reminder
One often-overlooked issue: timing matters for employer match.
- Many employer matches are calculated per pay period
- If you max out too early in the year and your plan does not offer a year-end “true-up,” you may unintentionally miss out on matching dollars
- Roth contributions — including Roth catch-up contributions — do count toward employer match eligibility
- Employer match contributions themselves are typically made pre-tax
To avoid leaving match dollars on the table, contributions often need to be paced evenly across the year, especially if your plan does not have a true-up provision.
What we recommend
If this applies to you, we encourage you to connect with your HR or payroll team early in the year and ask:
“Can my plan ensure I’m maximizing my pre-tax contributions while directing my age-50+ catch-up contributions to Roth — and will this be paced to preserve employer match?”
A quick conversation now can help avoid:
- Missed employer match
- Incorrect contribution allocations
- Last-minute payroll fixes later in the year
How we can help
We’re happy to talk through your options, help you understand how these rules apply to your situation, and coordinate with your CPA if needed. If questions come up as you’re reviewing this with HR or payroll, please feel free to reach out.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.