New Roth Catch-Up Rules Take Effect in 2026 for High-Earning Individuals
Starting in 2026, high-income earners who participate in employer-sponsored retirement plans — like the MO Deferred Comp Plan — will see a change in how they make catch-up contributions. Under new IRS guidance related to the SECURE 2.0 Act, employees with higher wages — over $150,000 — will be required to direct catch-up contributions to a Roth (after-tax) account.
Who is impacted?
If your previous calendar year FICA wages from your State of Missouri employer exceed $150,000 (as reported in Box 3 of your W-2), and you are age 50 or older, you’ll be required to make any catch-up contributions over the$24,500 annual IRS maximum contribution limit on an after-tax Roth basis. The 2026 contribution limits, set by the IRS, are as follows:
- The normal annual contribution limit is $24,500 for all participants under age 50.
- Participants age 50 and over can contribute an additional $8,000 in 2026.
- Employees ages 60 to 63 can make a catch-up contribution of up to $11,250 to their retirement savings account.
For high earners, any catch-up amounts above the standard limit must be contributed as Roth (after-tax) starting 2026. Employees age 50 and over who want to contribute the maximum pre-tax amount ($24,500) and the maximum catch-up ($8,000) to Roth, would need to contribute the following amounts if paid semi-monthly:
- Maximum pre-tax contribution: $24,500 → $1,020.83 per semi-monthly paycheck ($24,500 ÷ 24)
- Maximum Roth catch-up contribution: $8,000 → $333.33 per semi-monthly paycheck ($8,000 ÷ 24)
What should you do next?
- Check your 2025 W-2 (Box 3) to see if your FICA wages exceed the threshold.
- Adjust your contribution elections if you plan to make catch-up contributions starting in 2026. Watch the How to Change Your Contribution Amount Tutorial for step-by-step directions.
- Contact your local financial education professional for help or if you have additional questions.
