Big changes coming in 2026 for “catch-up” contributions for US pension participants

Quick Recap

All US employees, or those who participate in a US pension plan (401(k), 403(b) and 457(b)), at present can make elective deferrals including the “catch-up” element into their employer’s retirement plan. These contributions can be made on a pre-tax basis or after-tax basis into a company-sponsored Roth or a combination of both.

What’s changing?

Starting 1 January 2026, participants who are aged 50 and above and have Social Security wages exceeding $150,000 in 2025 (Box 3 of your Form W-2) must make their catch-up contributions on a Roth basis. This means you pay taxes up front when contributing in order to enjoy tax free growth/withdrawals. For participants whose prior-year wages are $150,000 or less, catch-up contributions will remain either pre-tax or Roth.

Additionally, contribution limits as a whole are increasing in 2026:

• The standard elective deferral cap for 401(k)/403(b)/457(b) is rising to $24,500
• Catch-up contribution limits are rising to $8,000 for employees aged 50-59
• For those aged 60–63, there is a “super catch-up” option which further increases the catch-up limit to $11,250

What this means for you

For high-earning older employees (aged 50 and above, prior-year wages > $150k): Catch-up contributions will be made on an after-tax basis going forward – so the upfront tax deduction you may have relied on in prior years disappears. In short, you pay taxes upfront to benefit from tax-free growth and withdrawals in the future.

If your employer’s plan does not have a Roth option – unless the plan is amended, you might lose catch-up rights altogether! This makes early identification and communication vital.

For those below the wage threshold – your position remains the same: catch-ups can remain pre-tax (or Roth) depending on plan options.

Takeaways & recommended actions

Review your 2026 position – if you are approaching 50 in 2026 and earned $150,000 or more in 2025, be aware of the changes and the additional amounts you can contribute to a retirement plan.

Check if your employer plan offers a Roth option – if not, and you expect to be subject to the rule, you may lose access to catch-up contributions entirely.

Review your cash flow position as your federal taxes will increase in 2026 if you previously made catch-up contributions on a pre-tax basis.

Would you like to know more?

If you are a US pension participant and have questions about catch-up contributions and how they may impact you, please get in touch with your usual Blick Rothenberg contact, or David using the form below.