Are you counting on catch-up contributions to boost your retirement savings?
If you're a high earner approaching 50, a major rule change could disrupt your 2026 tax strategy.
Starting January 1, 2026, professionals earning over $145,000 will lose the ability to make pre-tax catch-up contributions to their 401(k) plans.
This shift affects thousands of successful professionals during their peak earning years, exactly when maximizing retirement savings matters most.
After helping hundreds of clients navigate complex tax changes, I've seen how these regulatory shifts can catch even the most prepared savers off guard. Here's what you need to know to stay ahead of this change.
The IRS finalized new regulations in September 2025 that fundamentally change catch-up contributions for higher earners. If you're 50 or older and earned more than $145,000 in FICA wages last year, you must make ALL catch-up contributions as Roth contributions starting in 2026.
This means no more pre-tax catch-up contributions that reduce your current taxable income. The 2026 catch-up limit is projected at $8,000 for those 50 and older, money you'll now pay taxes on upfront.
If your employer's 401(k) plan doesn't offer a Roth option, you can't make catch-up contributions at all.
Many employers are racing to update their systems before the January 1 deadline, but not all will make it.
The $145,000 threshold applies to FICA wages (Box 3 on your W-2) and adjusts for inflation each year. This affects a significant portion of professionals, managers, and business owners who've relied on catch-up contributions as a cornerstone of their retirement strategy.
This change creates immediate financial consequences that extend far beyond retirement planning.
Your 2026 tax bill will likely increase.
Someone in the 24% tax bracket making the full $8,000 catch-up contribution will pay roughly $1,920 more in taxes, money that previously stayed in their pocket.
You might face a savings gap.
Plans that aren't ready could leave you unable to make any catch-up contributions in early 2026.
This creates a potential shortfall during your peak earning years, exactly when maximizing retirement savings matters most.
There is a potential upside.
The mandatory shift to Roth contributions isn't entirely bad news.
If you expect higher tax rates in retirement, paying taxes now and enjoying tax-free withdrawals later could benefit you long-term.
Planning gets more complex.
This rule adds another layer to year-end tax planning. You'll need to coordinate with your employer and tax advisor to optimize your approach.
Don't wait until January to address this change. Here's your action plan:
This catch-up contribution change eliminates a valuable tax break for high earners, but it's not a financial disaster.
Many successful professionals will actually benefit from the forced shift to Roth contributions, especially those expecting higher tax rates in retirement.
The critical factor is staying informed and ensuring your employer's plan is ready. Don't let implementation delays derail your retirement savings during these crucial catch-up years.
Remember, financial planning gets more complex as regulations evolve, but you don't have to figure it out alone.
Whether you need help modeling the tax implications or want personalized guidance on optimizing your retirement strategy around these changes, professional support can make all the difference.
If you're ready for tailored financial planning that adapts to regulatory shifts like this one, consider scheduling a consultation with Infocus for ongoing guidance that keeps your retirement savings on track despite changing rules.
The most important step is the one you take today. Contact your HR department this week, and you'll be well-positioned for whatever 2026 brings.
At InFocus, we help successful professionals navigate changing financial rules with calm and clarity, especially when the goalposts move.
From tax strategy to retirement planning, our team makes complex changes (like the new Roth-only catch-up rule) easier to understand and act on.
We also offer ADHD-friendly tools and guidance designed to make financial planning feel simpler, less stressful, and more sustainable, no jargon, no overwhelm, just clear next steps that fit your brain and your goals.
You can download our free ADHD & Money eBook to discover why traditional budgets often fail and what actually works.