New catch-up rules

In this week's The Boost, we cover the new mandatory Roth catch-up rule that took effect January 1, 2026.

Catch-up contributions allow anyone 50 or older to contribute extra money to their retirement accounts beyond the standard annual limit. They exist for people who need to accelerate their savings as retirement gets closer.

If you're 50 or older and earned more than $150,000 last year (individually, not your household), your catch-up contributions must go into a Roth account.

Not optional. Mandatory. And if your plan doesn't offer a Roth option, you can't make catch-up contributions at all.

Today we break down who's affected, what it costs you upfront, and whether it actually helps you long-term.

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Who's affected

You're subject to the new rule if all three apply:

• You're age 50 or older• You earned more than $150,000 in W-2 wages from your current employer in 2025 (the rule uses prior-year income)• You want to make catch-up contributions in 2026.

This applies to 401(k), 403(b), and governmental 457(b) plans — not just 401(k)s.

If you earned $150,000 or more, the rule applies. If you earned less than $150,000, you're exempt — your catch-up can still go into a traditional pre-tax account.

See how you're affected

The numbers for 2026

The base 401(k) contribution limit for 2026 is $24,500.

If you're 50 or older, you can contribute an additional $8,000 in catch-up contributions — up from $7,500 in 2025. That brings your total to $32,500.

If you're 60, 61, 62, or 63, there's a new "super catch-up" of $11,250 instead of $8,000. That's a total of $35,750. This is also new for 2026 under SECURE 2.0.

The catch: if you earned $150,000 or more in W-2 wages last year, every dollar of that catch-up — whether $8,000 or $11,250 — must be Roth.

What this costs you (upfront)

Under the new rule, your $8,000 catch-up goes in after-tax. No deduction. At a 32% tax bracket, you pay $2,560 more in taxes this year.

At 24%, you pay $1,920 more. At 32%, it's $2,560. At 37%, it's $2,960.

That's real money out of your paycheck. Your take-home pay drops because the tax benefit disappears.

Under the old rules, catch-up contributions were pre-tax — you got the deduction. That's gone now.

What you gain (long-term)

The tradeoff: Roth withdrawals in retirement are completely tax-free.

Say you're 52 and you contribute $8,000 per year in Roth catch-up for 13 years until age 65. At 7% annual growth, that's $104,000 contributed, growing to about $161,000.

Traditional catch-up: $161,000 balance, but you owe $39,000-$52,000 in taxes at withdrawal (24-32% bracket) = $109,000-$122,000 after-tax

Roth catch-up: $161,000 balance, tax-free = $161,000 after-tax The difference: $39,000-$52,000 more in your pocket with Roth.

Minus the upfront cost ($25,000-$33,000 in lost deductions over 13 years), you still come out $6,000-$27,000 ahead — plus the Roth balance doesn't trigger required minimum distributions.

But it depends on your time horizon. If you're 63 and retiring at 65, two years of Roth catch-up won't generate enough tax-free growth to offset the upfront cost. The math only works with enough time.

*Hypothetical growth rate of 7% used for illustration. Actual returns may vary and are not guaranteed.

The problem: what if your plan doesn't offer Roth?

This is the part that catches people off guard.

If your employer's plan doesn't have a Roth option, you cannot make catch-up contributions at all under the new rule. You're locked out.

Say you're 55, earn $200,000, and your company's 401(k) only offers traditional pre-tax contributions. You can contribute $24,500 to the base limit, but the $8,000 catch-up is off the table entirely.

Most large employers with plans through Fidelity, Vanguard, or Schwab already offer Roth. But smaller companies and some older plans might not. If yours doesn't, contact HR now — many plan sponsors are scrambling to add this in 2026.

What Mezzi members are doing

The math depends on your current bracket, your projected retirement bracket, your time horizon, and what accounts you already have.

Mezzi can run this analysis for you in minutes — and show you whether the mandatory Roth catch-up helps or hurts your specific situation.

Build and analyze your personalized retirement strategy.

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