Your 401(k) Catch-Up Is Roth Now. Your Last Three Paystubs Tell You If Payroll Got It Right

Hands holding a printed pay stub under a magnifying glass on a sunny desk

If you are 50 or older and earned more than $150,000 from your employer last year, there is a new line on your paycheck you need to understand. Starting in 2026, every catch-up dollar you put into your 401(k) must go in as Roth — after-tax — money. No more pre-tax catch-ups, no more current-year deduction on that portion.

Your plan was supposed to make the switch automatically once your contributions crossed $24,500. Most plans did. Some did not get it right — and the worker, not the employer, pays for the mistake at tax time. Three paystubs are enough to check.

The rule in 60 seconds

Section 603 of the SECURE 2.0 Act added section 414(v)(7) to the tax code. It took effect January 1, 2026, after a two-year transition period that ended December 31, 2025 (IRS Notice 2023-62). The IRS issued final regulations on September 16, 2025 (announced in news release IR-2025-91). You are covered if all three of these are true:

You will be age 50 or older at any point in 2026.
Your 2025 FICA wages from the employer sponsoring the plan exceeded $150,000 — that is Social Security wages, Box 3 of your W-2, not your total income and not Box 1.
You are making catch-up contributions to a 401(k), 403(b), or governmental 457(b) plan (or the federal TSP).

Only the catch-up portion must be Roth. Your regular contributions — up to $24,500 in 2026 — can still be pre-tax, Roth, or a mix, however your plan allows.

The 2026 numbers

These are the IRS figures for 2026 (IRS Notice 2025-67; news release IR-2025-111):

Regular employee deferral limit	$24,500
Catch-up, age 50 and older	$8,000 — total $32,500
Enhanced catch-up, ages 60–63 (if your plan adopted it)	$11,250 — total $35,750

Catch-up taxation is not the only thing that changed for retirement savers this year — the IRS is also mailing CP321J letters about the new Saver’s Match, a federal match of up to $1,000 a year on retirement contributions starting with 2027 contributions.

The 3-paystub audit

Pull your last three pay stubs — or just the most recent one, since the year-to-date columns carry the whole story. Three stubs let you watch the switch happen in real time.

Step 1: Have you crossed $24,500? Find the year-to-date total for your employee 401(k) contributions (pre-tax and Roth combined — both count toward the same $24,500). If you are under it, the rule has not touched you yet. If you are over it, you are in catch-up territory, and every dollar above that line should be coded Roth.

Step 2: How are the dollars above $24,500 coded? Look at the contribution source labels on your stub — wording varies by payroll provider, but you are looking for something like “Roth 401(k)” versus “401(k) Pre-Tax.” If you are covered by the rule and the dollars above $24,500 are still reducing your taxable wages — still pre-tax — payroll misrouted them. Flag it with your HR department or plan administrator now, not at tax time. The final regulations give plans correction methods for exactly this mistake, but only if someone catches it.

Step 3: Were you silently blocked? If your plan has no Roth option and you were over the $150,000 threshold, your catch-ups should be zero this year — check that contributions actually stopped at $24,500 rather than continuing as pre-tax (that would be the misroute from Step 2). If contributions stopped and you had been counting on the full $32,500 or $35,750, ask your plan administrator directly whether a Roth feature is coming.

The rule working vs. an actual error

This is the rule working: your contributions were coded pre-tax through the spring, then switched to Roth-labeled contributions after you crossed $24,500. Multiple benefits publications report that workers assumed this mid-year paycheck change was a payroll error. It was not — that is Section 603 operating as designed.

This is an actual error: pre-tax catch-up dollars continuing past the $24,500 line for a covered worker; catch-ups disappearing entirely from a plan that does offer Roth; or contributions stopping at $24,500 with no explanation when you expected the full catch-up amount. Any of those deserves a call to your plan administrator.

A calculator beside a stack of pay stubs on a sunny kitchen table

What the lost deduction actually costs

A traditional catch-up lowers your taxable income the year you make it. A Roth catch-up does not — you pay income tax on that money now, at your current rate, before it reaches your account.

Illustrative math, not advice: take the standard $8,000 catch-up at a 24% marginal federal rate. As a pre-tax contribution, it would have cut this year’s federal income tax by $1,920. As Roth, you pay that $1,920 now instead of deferring it. In exchange, the contribution grows tax-free and comes out tax-free in retirement (if the Roth requirements are met). Whether that trade wins depends on your tax rate now versus in retirement — and that is exactly the kind of question worth thirty minutes with a tax professional. While you have your 401(k) paperwork out, it is also worth checking what the plan itself is charging you — fees compound against you for decades.

Five sharp edges people miss

The test is employer-by-employer, and it looks backward. Only 2025 wages from the employer sponsoring the plan count. Changed jobs? Your new employer’s plan tests wages you earned from that employer in 2025 — a new hire with no 2025 wages there is not covered for 2026, even at a high salary. Self-employed with no W-2 wages? Not covered.
“Exceeds” means exceeds. Exactly $150,000 in 2025 Box 3 wages does not trigger the rule. $150,001 does.
Box 3, not Box 1. The test uses Social Security (FICA) wages, not federal taxable wages. And because pre-tax 401(k) deferrals count as FICA wages, stuffing more into pre-tax does not pull you under the threshold.
Your employer’s payroll system may still be catching up. The final regulations are effective for 2026, but the IRS is allowing reasonable good-faith compliance into 2027 — which is a polite way of saying some payroll systems will get this wrong this year. That is the whole reason for the audit above.
State taxes can differ. Federal law requires the Roth treatment; your state’s treatment of Roth contributions and withdrawals may not match. One more reason to run this by a tax pro if your state has an income tax.

If your plan has no Roth option

Some employer plans still do not include a Roth 401(k) feature. If yours does not, and you crossed the threshold last year, there is no compliant way for you to make catch-up contributions in 2026 — not pre-tax, not Roth. You are capped at the $24,500 regular limit until the plan is amended. Ask your plan administrator directly whether a Roth feature was added for 2026. Do not assume it was. (The HSA, by contrast, remains the rare account that gives you a deduction going in and tax-free money coming out — here is how HSAs work and the 2026 limits.)

The downside, stated plainly

You lose the upfront deduction on the catch-up portion — real money this year, as the $1,920 example above shows. Roth is not automatically the better deal: if your tax rate in retirement ends up lower than today’s, paying tax now costs you. And unlike an investment choice you can revisit, the Roth-or-nothing character of each year’s catch-up is set by the calendar. This article is educational context, not advice about your situation — for decisions that depend on your tax picture, talk to a qualified tax professional.

Sources

IRS Notice 2025-67 (October 2025) — 2026 retirement plan dollar limits, including the $24,500 / $8,000 / $11,250 figures and the $150,000 Roth catch-up wage threshold.
IRS news release IR-2025-111 — 2026 elective deferral and catch-up limits.
IRS news release IR-2025-91 (September 16, 2025) — final regulations under 26 CFR 1.414(v)-2 implementing SECURE 2.0 Section 603; reasonable good-faith compliance standard through 2026.
IRS Notice 2023-62 — two-year administrative transition period, ended December 31, 2025.
Secondary explainers cross-checked September 2026: Considerable (“The Roth Catch-Up Rule for 2026”), Rates Chaser (August 26, 2026), Investormint (September 2026), WilkinGuttenplan (September 2026). Figures above were verified against the IRS sources, not taken from these summaries.

Roth Catch-Up Rule FAQ

Do my regular 401(k) contributions have to be Roth too?

No. Only catch-up dollars — contributions above the $24,500 regular limit — must be Roth if you’re covered. The first $24,500 can be pre-tax, Roth, or a mix, however your plan allows.

What if my employer’s plan doesn’t offer Roth contributions?

Then you can’t make catch-up contributions at all in 2026 if you’re covered by the rule. You’re capped at the $24,500 regular limit until the plan is amended to add a Roth feature.

I changed jobs in 2025. Which wages decide whether I’m covered?

The test uses your 2025 FICA wages — Box 3 of your W-2 — from the employer sponsoring the plan you’re contributing to. Wages from a different employer don’t count: a new hire with no 2025 wages from that employer isn’t covered for 2026.

My paycheck changed mid-year and my contributions now say Roth. Was that a mistake?

Probably not. If you crossed the $24,500 regular limit and were over the $150,000 wage threshold, that’s Section 603 working as designed — not a payroll error. Run the 3-paystub audit in the article to confirm the dollars above the line are coded Roth.