Published February 2026 

Staying informed about regulatory changes is a key part of keeping your retirement strategy on track. If you are a high-income earner, a new federal rule may affect the way you save for your future. 

Starting in 2026, high earners ages 50 and over will be required to make catch-up contributions to employer-sponsored retirement plans on an after-tax Roth basis. This new requirement could increase your taxable income and affect the tax profile of your retirement portfolio. 

An Ameriprise financial advisor can help you make sense of the financial impact and identify strategies to keep you on track to your retirement goals. Here’s an overview of the new catch-up contribution rules and what they could mean for you: 

What are catch-up contributions? 

Catch-up contributions allow individuals ages 50 or older to put extra money in tax-advantaged retirement accounts like 401(k) plans and IRAs, beyond the standard annual limit. These additional contributions are designed to help investors boost savings as retirement approaches, giving them an opportunity to “catch up” and build a stronger financial foundation for the years ahead. 

2026 catch-up contribution limits 

*403(b) participants with 15 years of service or more may be eligible for an additional $3,000 catch-up contribution and may still make age-based catch-up contributions. 

**Governmental 457(b) participants within three years of retirement who have under-contributed for previous years may be eligible to contribute double the standard limit. However, if they make this election, they are not eligible for age-based catch-up contributions. 

Learn more: How to make the most of your retirement savings 

How are catch-up contributions changing? 

Effective in 2026, if you’re age 50 or older and earn more than a specific amount, then any age-based catch-up contributions to your 401(k), 403(b) or governmental 457(b) plan must be made on an after-tax Roth basis. 

For 2026, individuals who’ve earned more than $150,000 in 2025 from the employer sponsoring their retirement plan are subject to this new rule. This income threshold, which is subject to annual inflation adjustments, is based on the prior year’s earnings, as reported in Box 3 of your W-2 (Social Security wages).  

If you’re above this age and income threshold, this change means that: 

• Instead of contributing pretax funds to your employer-sponsored plan, you’ll contribute funds that have already been taxed.  
• These Roth contributions will grow tax-free and withdrawals in retirement will also be tax-free (if requirements are met).  
• You can no longer use catch-up contributions to lower your taxable income. 

Who does the Roth catch-up rule not apply to? 

This rule does not apply to: 

• Self-employed individuals, as they do not have W-2 wages. 

• New employees in their first year of employment, as they have no prior-year wages with their current employer. 

Additionally, this rule excludes traditional IRAs, SIMPLE IRAs, Roth IRAs and non-governmental 457(b) plans. It also does not apply to the special “15 years of service” catch-up contribution that is permitted for 403(b) plans or the “three-year catch-up” election allowed for 457(b) plans. 

What if my employer doesn’t offer Roth contributions? 

If an employer’s plan is subject to this new rule and doesn’t offer Roth contributions, high earners won’t be able to make age-based catch-up contributions at all. Employers are required to make a good faith effort to comply with these changes in 2026. If you’re unsure whether your plan offers a Roth option, contact your human resources department or plan administrator to confirm.  

How might this new rule impact my taxes and financial situation? 

The new Roth catch-up contribution rule could have both near-term and long-term impacts on your taxes and financial situation. 

Near-term impact 

• Lower take-home pay: You’ll pay taxes on these contributions upfront, which could potentially reduce your net paycheck. 

• Higher taxable income: Depending on your total income and if you’ve already been making catch-up contributions, the shift from pretax contributions to Roth contributions could raise your taxable income and potentially push you into a higher tax bracket, increasing your annual tax liability.  

Long-term impact 

• Tax-free withdrawals in retirement: The upside of Roth contributions is that they grow tax-free and withdrawals in retirement are also tax-free, if certain conditions are met. Roth distributions are also not considered income in retirement for Social Security taxation, Medicare premiums or the net investment income tax. 
• RMD management: Roth 401(k) withdrawals are not subject to required minimum distributions (RMDs). This can help you manage the impact of RMDs, Social Security taxes and Medicare surcharges more effectively. 
• Tax diversification: Having a mix of pretax and Roth assets allows for greater flexibility when managing tax brackets in retirement. 

I’m subject to this new rule — what actions do I need to take? 

If the new Roth catch-up contribution rule impacts you, take these key actions to prepare: 

• Review your employer’s retirement plan: Confirm whether your employer-sponsored plan offers Roth contributions. If it doesn’t, you may not be able to make catch-up contributions in 2026.  
• Adjust your retirement contributions: Make adjustments to your contribution percentages to account for this new rule and designate the appropriate amount to Roth contributions. 
• Consider the income impacts: Since Roth contributions are made with after-tax dollars, your take-home pay may decrease as your catch-up contribution dollars are applied. Review your budget to account for the higher tax impact on your paycheck and make any necessary changes. 
• Examine withholding amounts: You may need to adjust your W-4 tax withholding to account for the increased taxable income. 
• Plan for taxes: Work with a tax professional to understand how the upfront tax on Roth contributions will affect your overall tax situation. If the additional taxable income could push you into a higher tax bracket, you may want to explore other ways to reduce your taxable income. 

We can help you make sense of the new catch-up rules 

If you are affected by this new rule and unsure of where to begin, an Ameriprise financial advisor can offer personalized guidance to help you navigate these changes and their impact on your retirement strategy.