Mandatory Roth Catch-Up in 2026: One W-2 Box Decides It, and What It Costs by Bracket

The mandatory Roth catch-up is live for 2026. Treasury and the IRS closed the rulebook last September in TD 10033, and the transition relief that had been holding the requirement off expired on December 31, 2025. Whether any of it reaches your paycheck comes down to one box on a W-2 you already have in a drawer.

Two documents with two different start dates are what make this confusing, so here is the split in plain words. The law itself, section 603 of SECURE 2.0, has applied to contributions in taxable years beginning after December 31, 2023, and the administrative relief that let plans set it aside ran out on December 31, 2025, which is why 2026 is the first year the requirement bites for the people it covers. The regulations that spell out how to operate it apply to taxable years beginning after December 31, 2026, so through this year your plan follows the statute on a reasonable, good faith reading of its own. For you that means the answer to whether your 2026 catch-up has to be Roth comes from the law and is settled, while the mechanics of how your plan gets you there this year are your plan's call, worked through document by document in the August 18 post on Roth versus traditional deferrals. That is the whole timing story. The rest of this post is the part written for plan sponsors everywhere and for participants almost nowhere: who the rule actually reaches, what it takes out of this year's take-home pay, and what has to happen in retirement for the money to have been worth it.

Three lines settle whether the rule reaches you

Three facts decide it, and only the last one needs anyone else. Read box 3 of your 2025 W-2, check your age on December 31, then ask whether your plan offers a Roth source at all. That order matters, because the first two are on paper you already have and the third is the one that can cost you the whole contribution.

The threshold is prior-year wages, so 2025 decides 2026 and 2026 decides 2027. Notice 2025-67 sets the figure: the wage threshold "used to determine whether an individual's catch-up contributions to an applicable employer plan ... for 2026 must be designated as Roth contributions, is increased from $145,000 to $150,000." It reads wages from the employer that sponsors the plan, measured per common-law employer, which is why a raise at a new job this year does nothing to this year's answer.

Age sets the amount, not the requirement. The regular deferral limit for 2026 is $24,500, the catch-up above it is $8,000 from age 50, and the super catch-up for anyone who turns 60, 61, 62 or 63 during the year is $11,250. Those are the same limits behind the mid-year 401(k) checkup post, and the Roth requirement changes their flavor rather than their size.

The third test, whether the plan offers a Roth source, is the expensive one. The regulation is blunt about what happens in a plan with no designated Roth program: for a participant subject to the requirement, "the maximum amount of catch-up contributions permitted under section 414(v) is $0." The plan does not fail the universal availability rule by producing that result, and coworkers under the wage line keep making pre-tax catch-ups in the same plan while you make none.

Box 3 is not your salary, and your own 401(k) money does not lower it

Box 3 counts Social Security wages, and elective deferrals stay inside it. Deferring more shrinks box 1 and leaves box 3 where it was, so nobody contributes their way under the line.

The W-2 instructions say it directly. Box 3 reports "elective deferrals to certain qualified cash or deferred compensation arrangements and to retirement plans described in box 12 (codes D, E, F, G, and S) even though the deferrals are not includible in box 1." Every dollar you route into the plan pre-tax leaves box 1 and stays in box 3.

Money that runs through a cafeteria plan works the other way and does come out of box 3. Health premiums, a health FSA, and HSA contributions made by salary reduction sit outside Social Security wages under section 125, which is a real lever for someone hovering near the line and a reason the HSA and FSA comparison matters beyond the medical spending itself. One limit on that claim: the W-2 instructions state the HSA leg outright, saying employee HSA contributions are wages subject to Social Security tax "unless made through a cafeteria plan," while the premium and FSA legs follow from the section 125 rule rather than from one quoted sentence I can point at.

The wage base does not rescue anyone either. Box 3 stops at the Social Security wage base, $176,100 for 2025, which sits well above the threshold, and Treasury said in the preamble that it "does not expect that applying the Social Security wage base limit will ever affect the determination." The reason the test uses Social Security wages and not Medicare wages is the next section's business: it is what keeps a large group of State and local employees out of the rule entirely.

What it costs this year: $1,920, $2,800, or $3,600

The bill is the catch-up amount multiplied by your marginal rate, which runs from $1,920 to $3,600 across the three cases below, and it arrives as smaller take-home pay through the year, not as a bill in April.

Each row assumes the base $24,500 deferral stays pre-tax and only the catch-up changes treatment, with 2026 rates from Rev. Proc. 2025-32, the standard deduction, and no state income tax. A state income tax adds to every figure.

Spread across the year, the 52-year-old's $1,920 is $80.00 of extra withholding on each of 24 paychecks, and the 61-year-old's $3,600 is $138.46 on each of 26. That is on top of the catch-up deferral itself, so the paycheck moves twice for one decision, which is exactly the kind of change that shows up as a withholding surprise later if nobody traces it back. The W-4 audit post covers the tracing.

The multiplication breaks at a bracket line, and every page that ranks for this hands you the multiplication. Take a different single filer, one sitting just under the 35% line at a $300,825 salary. Taxable income is $252,225 if the catch-up is pre-tax and $260,225 if it is Roth, so the $8,000 lands half in the 32% band and half in the 35% band. Tax goes from $57,168 to $59,848, an added $2,680, or a blended 33.5%. Multiply by 32% and you are $120 light; multiply by 35% and you are $120 heavy.

What the money buys, and the rate that has to show up later

None of that is money burned. It buys Roth basis that grows and comes out untaxed, and the question is whether your retirement tax rate lands above the break-even, which sits just under the rate you pay now and rises toward it as your horizon shortens.

The comparison is against what you used to do: the same dollars pre-tax, plus the tax saving invested in a taxable account. I charged that side account one 15% long-term capital gains payment at the end, assumed 6% nominal growth and withdrawal at 67, and ignored annual dividend and turnover tax.

The last column is my own division, not a published figure, and it carries the finding. The closed form explains why:

break-even rate = your current marginal rate x (1 - 0.15 x (1 - 1 / growth factor))

The term in the outer parentheses runs from 0.85 over an endless horizon up to 1.00 at a horizon of zero. So the group that loses the most dollars in the year the rule bites, the 60-to-63 window at $11,250, is also the group with the least time to earn them back, and it needs a retirement rate of 30.6% against the 32% it pays while still working. Several of the pieces ranking for this call the mandate a gift to high earners. On these numbers it is a gift to someone who expects to be taxed in retirement at nearly the rate they pay today.

Four things push against my own arithmetic, and the strongest is that my side account is too clean: a real taxable account pays tax on dividends and turnover every year, which drags its value down and makes the forced Roth look better than 21.9% suggests. Next, anyone who has deferred pre-tax for twenty-five years may face required minimum distributions large enough to put them near their working rate, which is the condition that clears the bar. Roth money is also quieter in retirement, with no lifetime RMD for the owner and no effect on the combined income that decides how much of a Social Security benefit gets taxed or which Medicare surcharge bracket applies, none of which shows up in the table, and all of which sits in the same family of questions as the COLA and Part B arithmetic. Last, the whole comparison assumes you would have invested the $1,920 instead of spending it.

If I were the 61-year-old, I would treat the break-even as close enough to a coin flip that it is not worth agonizing over, and put the attention on the third test, whether the plan offers Roth at all, instead. The 62-versus-67 Social Security break-even ran on the same kind of assumption set, and changing one input there moved the crossing point by years. Used as a rule of thumb, this table says the forced Roth is roughly neutral when your retirement rate matches your current bracket.

Four situations where the rule does not reach you

The requirement runs on FICA wages from one employer for one prior year, and four fact patterns fall outside it even at high incomes.

The regulation's own Example 2 shows how far apart total pay and FICA wages can sit. A participant becomes a partner in May, ends the year with $60,000 of FICA wages and a $155,000 distributive share, which is his own partnership income and not the threshold figure, and is not subject: "Although Participant A had total compensation of $215,000 ... only $60,000 of that amount were FICA wages." Anyone with 1099 or partnership income should read that alongside how self-employment income gets taxed on its own track, because the same dollars that raise your estimated payments do nothing here.

Example 4 is the job-change case. Employer F reports $160,000 of 2026 FICA wages, the participant transfers to Employer G in the same controlled group, G reports $35,000, and all the 2027 deferrals come out of G's pay. Not subject, "even though Participant C had wages from Employer F (an employer sponsoring the plan) that exceeded $155,000," because the plan had made no aggregation election. Whether your old account moves with you is a separate decision, worked through in the post on leaving or rolling over an old 401(k). Note that the $155,000 in these examples is the regulation's stated hypothetical for a 2027 taxable year, not a published threshold. The IRS has not announced the real 2027 figure as of August 26, 2026.

Before December: the deemed election, and the Roth dollars that already count

Two mechanics decide how this actually lands in your account, and one of them can shrink the correction to a quarter of what you expect.

The first is the deemed Roth catch-up election. For a plan to rely on the correction machinery, the preamble says it "would not meet this requirement unless the plan provides for a deemed Roth catch-up election," under which deferrals past the annual limit "would automatically be made as designated Roth contributions, even if the participant has not made an affirmative election." The condition attached is that you get "an effective opportunity" to elect something different. So the November paycheck that suddenly shrinks is the deemed election firing, not a payroll error, and you are entitled to change it.

The second is that Roth deferrals you already made this year count toward the requirement. Example 6 works it: $30,000 of total deferrals against a $25,000 limit leaves $5,000 that has to be Roth, but the first $3,750 of the year's deferrals were already designated Roth, so only $1,250 needs correcting. Someone splitting deferrals between pre-tax and Roth all year may have satisfied most of the requirement without noticing.

What happened when I ran the eligibility test cold

I gave Claude the two fact patterns and the regulation's own examples with no sources attached, and it cleared the trap that catches most explainers while slipping on the one point it had itself flagged two answers earlier.

Here is the message it got, verbatim. Nothing else was supplied: no links, no notice, no fact sheet.

QUESTION 1. I'm 52, single, no state income tax. My 2025 W-2 shows box 1 wages $135,500 and box 3 (Social Security wages) $158,000 from the same employer I still work for. In 2026 my salary is $160,000. I'll defer the full $24,500 into my 401(k) plus the $8,000 age-50 catch-up. My plan offers a Roth 401(k) option.
(a) Under the SECURE 2.0 rule that requires catch-up contributions to be Roth for higher earners, does my 2026 catch-up have to be Roth? Which W-2 box and which year's wages decide it, and what is the threshold?
(b) Using the 2026 federal brackets and standard deduction, how much more federal income tax do I pay in 2026 if the $8,000 catch-up is forced to Roth instead of pre-tax? Show taxable income and tax under both treatments, and the difference per paycheck over 24 pay periods.
(c) If instead I were 61 and eligible for the $11,250 super catch-up, married filing jointly with household wages of $490,000 (me $310,000, spouse $180,000), what is the extra 2026 federal tax from the forced-Roth treatment?

QUESTION 2. Apply the same rule to these situations. Assume, as the regulations' own examples do, that the Roth catch-up wage threshold applied to 2026 FICA wages is $155,000 and the question is whether the person's 2027 catch-up contributions must be Roth. For each, answer Subject / Not subject and give the reason in one or two sentences.
- Example 1: An employee had $156,000 of FICA wages from an accounting firm from January to October 2026, then became a partner of the firm and received a $30,000 distributive share of partnership income for the rest of 2026.
- Example 2: An employee became a partner in May 2026. For 2026 the person had $60,000 of FICA wages from the firm and a $155,000 distributive share of partnership income, total compensation $215,000.
- Example 4: A controlled group of two employers, F and G, sponsors one 401(k) plan. In 2026 Employer F reported $160,000 of FICA wages for the participant and Employer G reported $35,000. In 2027 the participant works only for Employer G and all 2027 deferrals come from Employer G compensation. The plan has not made any election to aggregate wages across employers.
- Example 6: In 2027 a participant deferred $30,000 against a $25,000 elective deferral limit, with the first $3,750 of the year's deferrals designated as Roth and the rest pre-tax. The person is subject to the Roth catch-up requirement and the catch-up limit is $8,000. How much of the excess needs to be corrected (re-characterized as Roth) under the rule that Roth deferrals made earlier in the year can count toward the catch-up?

QUESTION 3. If my plan does NOT offer a Roth option at all and I am subject to the rule, can I still make a pre-tax catch-up in 2026? One or two sentences.

Every verdict matched the regulation, including the two that look wrong at a glance. Example 2, where $215,000 of total compensation is not subject and $60,000 of FICA wages is the only number that counts, is the one a model reading total pay gets backwards, and it read the right line. The dollar answers matched too: $1,920 and $3,600, arrived at bracket by bracket and then checked by a one-line multiplication.

The slip is in the second fact pattern. Asked about a 61-year-old earning $310,000 in 2026, the run wrote that "your $310,000 salary means your prior-year Box 3 ... is comfortably above $150,000." Two answers earlier it had warned that the current year's salary is irrelevant and that the prior year is the only year that counts. The conclusion is probably right for a long-tenured employee, but the reasoning is the exact error the run had just told the reader to avoid. It stated the rule correctly in one answer and stopped applying it in the next.

It also labeled every recalled figure with a confidence level and told me to verify the threshold against the IRS notice. That is the behavior you want, and it is why the useful way to use a model on a rule like this is to hand it a published example first, the way the federal aid formula post proves the model on a worked answer before touching real numbers. The regulation publishes six worked examples at 90 FR 44551-44553, with the facts and the correct answer both stated, which is what makes them usable as a check.

FAQ

Does my 401(k) catch-up have to be Roth in 2026, and how do I check without asking HR?

Pull your 2025 W-2 and read box 3, Social Security wages. If that number is above $150,000 and the wages came from the employer that sponsors your plan, your 2026 catch-up has to be designated Roth. Notice 2025-67 sets that threshold, and it applies to the prior calendar year, so 2025 wages decide 2026 and 2026 wages decide 2027. Box 1 is the wrong box: it drops by every dollar you defer pre-tax, while box 3 does not, so a reader whose box 1 reads $135,500 can still be over the line at $158,000 in box 3. The one thing you cannot read off the form is whether your plan offers a designated Roth source, and that is worth a single question to the plan administrator, because a plan with no Roth program has to cap your catch-up at $0 instead of $8,000.

How do I know whether my 2025 wages crossed the $150,000 threshold when my total pay was higher than the figure in box 3?

Box 3 is Social Security wages, and it is neither your gross pay nor your taxable pay. Three differences move it. Your pre-tax 401(k) deferrals are included in box 3 even though they are excluded from box 1, so deferring more never pulls you under the line. Cafeteria-plan salary reductions such as health premiums and a health FSA sit outside Social Security wages, so those do pull the number down. And box 3 stops at the Social Security wage base, $176,100 for 2025, which sits above the $150,000 threshold, so the cap cannot hide a crossing. Treasury said the same in the preamble to the final regulations: it does not expect the wage base limit to ever affect the determination. If the pay you have in mind is a distributive share from a partnership, that is self-employment income and not FICA wages, and it does not count toward the test at all.

Does the $11,250 super catch-up for ages 60 to 63 also have to be Roth, and does the short horizon change the answer?

Yes, and the horizon is what makes this group the worst hit. The rule reads your own box 3 from your own employer regardless of age, so a 61-year-old over $150,000 has to designate the whole $11,250 as Roth. In the 32% bracket that is $3,600 of extra federal tax for 2026, the largest bill in this post, and it lands on the person with the least time to earn it back. On a 6% return held to age 67, six years of growth turns $11,250 into $15,958, and the retirement tax rate that makes the forced Roth worth the money is 30.6%, which is 96% of the 32% rate being paid today. A 52-year-old in the 24% bracket needs 21.9%, or 91% of the current rate. The bar rises toward your current bracket as the years to withdrawal shrink.

What happens if my plan does not offer a Roth option at all?

You lose the catch-up entirely for that year. The final regulations say that if a plan has no qualified Roth contribution program, then for a participant subject to the Roth catch-up requirement the maximum catch-up permitted is $0. Not $8,000 pre-tax, not a smaller number, zero. The plan does not fail the universal availability rule for that result, and participants under the wage threshold in the same plan keep making pre-tax catch-ups as usual. A 55-year-old over the line in a plan with no Roth source loses $8,000 of contribution room, and someone aged 60 to 63 loses $11,250. This is the check worth making early in the year instead of in December, because adding a Roth source is a plan amendment and it is not something payroll can fix in one cycle.

Sources

• IRS, Notice 2025-67, 2026 amounts relating to retirement plans and IRAs, read August 26, 2026 (the Roth catch-up wage threshold rising from $145,000 to $150,000; the $24,500 deferral limit; the $8,000 catch-up and the unchanged $11,250 super catch-up): https://www.irs.gov/pub/irs-drop/n-25-67.pdf
• Treasury and IRS, TD 10033, Catch-Up Contributions, 90 FR 44527-44553, September 16, 2025 (the $0 catch-up limit in a plan with no Roth program at §1.414(v)-2(b)(2); the FICA wage definition and the State and local government discussion at 44534-44535; the deemed Roth catch-up election at 44530; Examples 1, 2, 4 and 6 at 44551-44553; the applicability dates at §1.414(v)-2(e)): https://www.federalregister.gov/documents/2025/09/16/2025-17865/catch-up-contributions
• IRS, IR-2025-91, September 15, 2025 (the final regulations, and the Notice 2023-62 transition period ending December 31, 2025): https://www.irs.gov/newsroom/treasury-irs-issue-final-regulations-on-new-roth-catch-up-rule-other-secure-20-act-provisions
• IRS, Rev. Proc. 2025-32, read August 26, 2026 (the 2026 rate tables and standard deduction used in every dollar figure here): https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
• IRS, 2026 General Instructions for Forms W-2 and W-3, read August 26, 2026 (box 3 including elective deferrals; the HSA sentence on cafeteria plans): https://www.irs.gov/pub/irs-pdf/iw2w3.pdf
• Social Security Administration, Contribution and benefit base, read August 26, 2026 (the $176,100 wage base for 2025 that caps box 3): https://www.ssa.gov/oact/cola/cbb.html
• Cold run transcript, Claude (Opus 5), August 26, 2026, single turn, no sources supplied and no rerun after the reasoning slip surfaced.

Disclaimer

This is an educational explainer about a published federal rule, not tax, legal or investment advice, and none of it is specific to your plan or your return. The salaries, ages and filing statuses here are illustrative inputs you replace with your own. The break-even figures are arithmetic on stated assumptions, 6% nominal growth, a single 15% capital gains payment at the end, withdrawal at 67 and no state income tax. They are not forecasts, and changing any assumption moves them. The 2027 wage threshold has not been published as of August 26, 2026, and the $155,000 appearing in the regulation's examples is a stated hypothetical for those examples only. The statute covers 2026 contributions and the regulations bind from 2027, so exactly how your plan operates the requirement this year is its own good-faith decision. Confirm your own numbers with your plan administrator and a tax professional before changing an election.