In 2026, retirement plan limits set by the IRS include meaningful updates for individuals age 50 and up. These changes include the enhanced “super” catch-up window at ages 60–63 and the start of the Roth‑only rule for higher earners’ catch‑up contributions.

What Is the Roth Catch‑Up Rule?
Beginning this year, employees age 50 and above whose prior year wages from their current employer exceed the indexed threshold ($150,000 for 2026) must make all catch‑up contributions on a Roth—or after‑tax—basis.

In practice, many higher‑earning employees should expect their 2026 catch‑up contributions to be Roth.

Why This Matters
With this change, considerations to take into account include:

• Loss of upfront deduction: Higher‑earning participants may lose the immediate tax deduction on catch‑up contributions—but in exchange gain tax‑free Roth growth and more distribution flexibility later.
• Plan design impacts: Employers whose plans do not currently offer a Roth option will need to amend their plans; otherwise, affected employees will be unable to make catch‑up contributions at all.

How Does This Affect You?
It’s important that you understand how this change may affect you, including:

• This rule applies only to employer‑sponsored retirement plans—401(k), 403(b), 457(b), and Thrift Savings Plan (TSP).
• The wage threshold is based solely on your prior‑year FICA wages from your current employer, shown in Box 3 (Social Security wages) on your W‑2.
• Pre‑tax deferrals do not reduce Box 3 wages, so contributing more pre‑tax will not help someone fall below the threshold.

Because this change may influence your tax bracket, retirement savings strategy and the mix of pre‑tax vs. Roth contributions, it may be worth reassessing your 2026 planning approach.

Frequently Asked Questions
To help answer some of the more common questions, below is a short list of FAQs.

What if I changed jobs and had multiple W‑2s in the previous year?
Only wages from your current plan sponsor count toward the income threshold.

For example, if in 2025, you worked for both ABC Corp and XYZ Corp. Your combined W‑2 income was above the threshold but your wages from XYZ Corp alone were below it—and that is your current employer—you would not be required to make Roth catch‑up contributions. The rule applies only to prior‑year wages from your current employer.

Do employer matches have to be Roth too?
No. Employer contributions generally remain pre‑tax, unless your plan specifically allows otherwise. The Roth‑only requirement applies only to employee catch‑up contributions.

Could this affect my ability to contribute directly to a Roth IRA?
Possibly. Pre‑tax contributions, including pre‑tax catch‑ups, reduce your adjusted gross income (AGI). This can bring your modified AGI (MAGI) below the Roth IRA phase‑out range.

If catch‑up contributions must now be Roth, those dollars no longer reduce AGI—and that could push your MAGI into or out of Roth individual retirement account (IRA) eligibility.

However, you can still contribute to a Roth IRA using a backdoor Roth strategy. From a tax standpoint, it functions the same as a direct contribution, and the taxation is unchanged.

Are Roth 401(k) and Roth IRA contributions different?
Yes. Roth contributions you make to an employer‑sponsored plan are completely separate from contributions to your Roth IRA. Employer plans—such as 401(k)s or 403(b)s—have significantly higher annual contribution limits than IRAs, which allows you to put more money toward Roth savings each year. You’re also allowed to contribute to both a Roth IRA and a Roth 401(k)/403(b) at the same time.

It’s important to note that each type of account has its own set of rules for withdrawals, including different requirements for qualified distributions and penalties.

As always, Busey Wealth Management’s team of advisors is here to help you navigate changes and ensure you’re on the right track. To find an advisor near you, visit busey.com/wealth-management.

This is not intended to provide legal, tax or accounting advice. Any statement contained in this communication concerning U.S. tax matters is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties imposed on the relevant taxpayer. Clients should obtain their own independent tax advice based on their particular circumstances.

This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities.

This presentation is for general information purposes only. It does not take into account the particular investment objectives, restrictions, tax and financial situation or other needs of any specific client.