{"id":15002,"date":"2026-01-07T10:47:09","date_gmt":"2026-01-07T15:47:09","guid":{"rendered":"https:\/\/www.figmarketing.com\/blog\/?p=15002"},"modified":"2026-01-07T15:38:00","modified_gmt":"2026-01-07T20:38:00","slug":"roth-catch-up-contributions-in-2026-an-advisors-guide-to-the-new-rules","status":"publish","type":"post","link":"https:\/\/www.figmarketing.com\/blog\/roth-catch-up-contributions-in-2026-an-advisors-guide-to-the-new-rules\/","title":{"rendered":"Roth Catch-Up Contributions in 2026: An Advisor\u2019s Guide to the New Rules"},"content":{"rendered":"\n

Beginning January 1, 2026, certain higher-income retirement plan participants who make catch-up contributions will generally need to make those catch-up contributions as Roth (after-tax) rather than pre-tax.<\/p>\n\n\n\n

Now\u2019s the time to identify impacted clients, verify plan Roth readiness, update 2026 tax projections early, and document the strategy so clients aren’t surprised at tax time.<\/p>\n\n\n\n\n\n\n\n

Why it Matters<\/strong><\/h4>\n\n\n\n

This rule is one of the most practical SECURE 2.0 updates because it touches real paychecks and real client questions. Many clients aged 50 and above have a familiar routine: maximize deferrals, add catch-up contributions, and assume those dollars reduce taxable income. In 2026, for the clients who fall under the new requirement, that last assumption changes.<\/p>\n\n\n\n

For financial professionals, the opportunity lies in leading with clarity. Clients don’t need legislative language. They need a simple explanation, a quick estimate of what changes, and a plan that keeps them on track.<\/p>\n\n\n\n

What Changed Under SECURE 2.0?<\/strong><\/h2>\n\n\n\n

SECURE 2.0 introduced a rule that requires certain higher-income participants to make catch-up contributions on a Roth basis. In plain English, it means that those catch-up dollars are taxed now, rather than being deferred until retirement withdrawals.<\/p>\n\n\n\n

This doesn’t eliminate catch-up contributions. It simply changes the tax treatment for some individuals and, by extension, the way you should coordinate withholding, estimated payments, and broader Roth strategy conversations.<\/p>\n\n\n\n

Who\u2019s Affected?<\/strong><\/h4>\n\n\n\n

Most advisors can evaluate the rule using three filters:<\/p>\n\n\n\n

    \n
  1. Is the client eligible to make catch-up contributions?<\/strong>
    Catch-up contributions apply to participants who meet the applicable age requirements and are contributing to eligible workplace plans.
    <\/li>\n\n\n\n
  2. Are the client\u2019s prior-year wages above the threshold that triggers mandatory Roth catch-ups?<\/strong>
    This rule is commonly understood as wage-based, not a broad household-income test. That distinction matters for business owners and clients with significant investment income.
    <\/li>\n\n\n\n
  3. Does the employer plan support Roth contributions and Roth catch-up processing?<\/strong>
    Even if a client is required to make Roth catch-ups, the plan has to be able to administer them correctly.<\/li>\n<\/ol>\n\n\n\n

    Tip: Wages vs. Income<\/strong><\/h4>\n\n\n\n

    Clients often assume \u201chigh income\u201d automatically equals \u201csubject to the rule.\u201d That\u2019s not always true. If the client\u2019s compensation is structured so that doesn’t cross the wage threshold, they may not be subject to mandatory Roth treatment. Conversely, a highly compensated W-2 employee may be subject to it even if the household has other planning priorities.<\/p>\n\n\n\n

    Related: What to Know About Trusts & IRAs Under the New RMD Rules<\/a><\/strong><\/h4>\n\n\n\n

    How Roth Catch-Ups Change Planning Conversations<\/strong><\/h2>\n\n\n\n

    The best framing is a planning update, not a compliance headline. Clients want to know what changes, what it costs, and why it can still be a \u201cwin.\u201d<\/p>\n\n\n\n

    Current-Year Tax Impact<\/strong><\/h5>\n\n\n\n

    Roth contributions are after-tax. If a client\u2019s catch-up dollars shift from pre-tax to Roth, taxable income may be higher than it would have been under the old approach. In January, that typically shows up as a withholding conversation. It\u2019s much easier to adjust early than to explain a surprise in April.<\/p>\n\n\n\n

    Retirement Tax Diversification<\/strong><\/h5>\n\n\n\n

    Roth dollars can create optionality later. For clients building retirement income plans, a tax-free \u201csleeve\u201d can support bracket management, Medicare planning, and legacy planning. Even clients who prefer pre-tax savings often appreciate a balanced approach that includes some tax-free retirement income potential.<\/p>\n\n\n\n

    Coordination with Roth Conversions<\/strong><\/h5>\n\n\n\n

    Roth catch-ups and Roth conversions can work together, but they can also compete for the same \u201ctax room\u201d in a given year. The goal isn\u2019t to maximize Roth for its own sake. The goal is to keep the client\u2019s overall tax plan aligned with their long-term retirement income strategy.<\/p>\n\n\n\n

    Take-Home Pay Expectations<\/strong><\/h5>\n\n\n\n

    Clients often perceive Roth as a change in take-home pay. If cash flow is tight, you can help evaluate options for them such as adjusting deferral rates, updating withholding, or shifting savings between buckets while keeping the retirement plan on track.<\/p>\n\n\n\n

    What You Should Do Now: A Practical Checklist<\/strong><\/h2>\n\n\n\n

    Step #1: Identify Potentially Affected Clients<\/strong><\/h4>\n\n\n\n