By Tim Grant
Pittsburgh Post-Gazette
(TNS)
Jan. 3 — For years, workers approaching retirement had some valuable flexibility when it came to making catch-up contributions to their retirement accounts.
They could decide whether to take the immediate tax break of pretax savings in their 401(k) plans or build tax-free income they could access later from a Roth individual retirement account.
But starting in January 2026, that choice will disappear for high-income earners.
Under a new federal rule, employees 50 and older who earned $150,000 or more the prior year will be required to make their catch-up contributions on an after-tax basis. The catch-up contributions must be made into a Roth IRA rather than a traditional 401(k) or 403(b).
For 2026, the maximum contribution for employees under 50 is $24,500, with an extra $8,000 catch-up for those 50 and older. For ages 60-63, the catch-up contribution increases to $11,250.
The difference is that contributions made to a 401(k) and 403(b) are not taxed; however, withdrawals in retirement are taxed at the person’s ordinary income tax rate. On the other hand, Roth IRA contributions are made with after-tax income, but withdrawals are tax-free.
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Financial adviser Vic Conrad said the rule change is more than a technical tweak. For those affected, it means higher income taxes today and, in many cases, a bigger federal tax bill.
“People who fall in that category need to financially be prepared for a larger tax bill,” said Mr. Conrad, owner of Pinnacle Financial Strategies in Pine, PA. “Simply put, all else being equal, you’ll have more taxable income as a result of the change.”
In the Post-Gazette’s latest “In Conversation With” Q&A, Mr. Conrad breaks down what the new rule means, who it affects and how savers can prepare.
Post-Gazette: Starting with the basics, what exactly changes in 2026 when it comes to catch-up contributions for higher-earning workers?
Mr. Conrad: The rule changes are fairly straightforward. Starting in 2026, anyone age 50 or older and who earned $150,000 or more in 2025 can no longer make those catch-up contributions “pre-tax” like in the past.
All catch-up contributions must go into the after-tax Roth investment bucket, if you will.
PG: In practical terms, what does it mean for people who will be required to make catch-up contributions to a Roth IRA on an after-tax basis?
Mr. Conrad: This means their taxable income will go up, thus their federal income taxes will go up.
For example, someone in their 50s who plans to max out their catch-up contributions and is in the 24% tax bracket—their taxes will go up by about $1,920. Someone in the 37% tax bracket will see a $2,920 tax increase.
And for someone age 60 to 63 looking to max out their catch-up contribution with the $11,250 amount—in the 24% tax bracket your taxes will go up about $2,700. And for the 37% tax bracket tax payer, it’s a $4,162 tax increase.
PG: What do you think Congress was trying to accomplish with this change?
Mr. Conrad: In my humble opinion, it was all about increasing tax revenues today as they continue to kick the can down the road related to getting spending under control.
PG: What happens if a worker’s company offers a 401(k) or a 403(b) but doesn’t offer a Roth IRA? How can they make catch-up contributions under those circumstances?
Mr. Conrad: If your plan doesn’t have a Roth option and your employer does not want to add one going forward, catch-up eligible participants with over $150,000 in earned income will not be allowed to make any catch-up contributions.
Employees with less than $150,000 in earned income can still make catch-up contributions on a pre-tax basis.
That said, one could always make investments outside their 401(k) and 403(b), but there are income limits related to deductible IRA and Roth IRA contributions that need to be factored in.
PG: What kind of planning and preparation are your clients doing in anticipation of this new rule?
Mr. Conrad: I’ve been making my higher-income-earner clients aware of this, particularly those where I handle their company retirement plan, as we need to make certain we have everything in place to monitor the contributions. And once we hit the catch-up amount coming into the plan, need to make certain we have the Roth investment account set up to receive those contributions.
PG: Are there any strategies or loopholes in the rule to allow individuals to make the catch-up contribution to a 401(k) if a Roth IRA is not offered by the company?
Mr. Conrad: Most employees don’t have much control over timing of their earned income, but you could try to keep your prior-year earned income below the current $150,000 threshold.
But I’m thinking that’s going to be difficult to do.
And as far as contribution strategies go, it’s fairly black and white I’m afraid. Either your previous year’s earned income is over $150,000 or it’s not. And you are age 50 or older, or you’re not.
That said, there is a narrow window in the tax law that, depending on your taxable income and if your spouse is not being covered by a retirement plan at work, where you could make a spousal IRA contribution and deduct it.
Photo credit: Apichat Noipang/iStock
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© 2026 the Pittsburgh Post-Gazette. Visit www.post-gazette.com. Distributed by Tribune Content Agency LLC.
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Ron Lang January 7 2026 at 1:33 pm
Tim: In your article "Roth IRA" is mentioned for the catch-up contributions. Should it say Roth 401k?