Here is how the Roth catch-up rule for 2027 high earners works. If you will be 50 or older in 2027 and your 2026 Social Security wages (W-2 Box 3) from the employer that sponsors your 401(k) are above the IRS threshold, every catch-up dollar you put in during 2027 has to go into a Roth account. You lose the pre-tax option for catch-ups. The threshold was $150,000 for 2026 and is projected to be about $155,000 for 2027. You can still make your regular deferrals pre-tax. Only the catch-up portion changes, and 2027 is the first year the IRS's final regulations generally apply. Check your plan elections before your first 2027 paycheck.
Last updated: October 23, 2026 · By Syed Kaja Moinudeen
- The rule comes from SECURE 2.0. The IRS's final regulations generally apply to tax years beginning after Dec. 31, 2026. For 2026, plans could follow a good-faith reading of the law.
- The test looks back one year. Your 2026 FICA wages from your plan's employer decide how your 2027 catch-ups must be made.
- 2026 limits (official): $24,500 base, $8,000 age-50+ catch-up, $11,250 for ages 60–63. 2027 limits are still projected: about $25,500, $8,500 and $11,750.
- If your plan has no Roth option, affected employees can't make catch-up contributions at all.
- New hires with no prior-year wages from the employer, and self-employed people with no FICA wages, generally aren't affected.
The Roth Catch-Up Rule in Plain English (SECURE 2.0 Section 603)
Catch-up contributions are the extra amount workers 50 and older can add to a 401(k), 403(b) or governmental 457(b) plan on top of the regular limit. Until recently, you chose whether those extra dollars went in pre-tax or as Roth.
Section 603 of the SECURE 2.0 Act took that choice away from higher earners. If your prior-year FICA wages from the employer sponsoring the plan exceed the threshold, your catch-up contributions must be designated Roth contributions. Roth money goes in after tax, and qualified withdrawals come out tax-free later. The IRS Roth comparison chart lays out the withdrawal rules.
The timeline has been confusing, so here it is. Treasury and the IRS issued final regulations in September 2025 (T.D. 10033 in the Federal Register). According to the IRS announcement, the Roth catch-up provisions generally apply to contributions in tax years beginning after Dec. 31, 2026. For 2026, plans could use a reasonable, good-faith interpretation of the law. Governmental and collectively bargained plans get later dates. In practice, many employers started in 2026. For 2027, the final rules are binding for most plans.
Does It Apply to You in 2027? The $150,000 Test, Box 3 Wages and the Projected $155,000 Threshold
You're affected in 2027 if both of these are true:
- You're catch-up eligible, meaning you're 50 or older by the end of 2027.
- Your 2026 FICA wages from the employer sponsoring your plan exceed the 2027 threshold.
The wage figure that counts is Social Security wages, which appear in Box 3 of your W-2. For the 2026 plan year, the IRS raised the threshold from $145,000 to $150,000 in Notice 2025-67, so 2025 wages above $150,000 triggered Roth catch-ups in 2026. The threshold is indexed for inflation. Benefits consultant Mercer's 2027 projections put it at $155,000, which would be tested against 2026 wages. That number is a projection, not an IRS figure.
Two details catch people out:
- Box 3 isn't Box 1. Pre-tax 401(k) deferrals still count toward Social Security wages. Your Box 3 number can be well above your taxable wages in Box 1. On a $150,000 salary with $24,500 deferred pre-tax, Box 1 might show about $125,500 while Box 3 is still near $150,000.
- Only wages from the plan's employer count. Pay from a second, unrelated job usually isn't added in. The final rules do let a plan administrator combine wages from certain related employers, such as those using a common paymaster.
Quick test: Look at "Social Security wages" year-to-date on your last pay stub of 2026. If it's clearly above $155,000, plan on Roth catch-ups in 2027. If it's close to the line, wait for the official threshold before you change anything.
2027 401(k) Limits at a Glance: Base, Age 50+ Catch-Up and Age 60–63 Super Catch-Up
The 2026 figures come from the IRS (IR-2025-111). The 2027 figures are actuarial projections reported by Forbes, citing Milliman, plus Mercer for the wage threshold.
| Limit | 2026 (official) | 2027 (projected) |
|---|---|---|
| Employee deferral (base) | $24,500 | ~$25,500 |
| Catch-up, age 50+ | $8,000 | ~$8,500 |
| Super catch-up, ages 60–63 | $11,250 | ~$11,750 |
| Max employee total, age 50–59 or 64+ | $32,500 | ~$34,000 |
| Max employee total, age 60–63 | $35,750 | ~$37,250 |
| Roth catch-up wage threshold | $150,000 (2025 wages) | ~$155,000 (2026 wages) |
The age 60–63 super catch-up applies if you turn 60, 61, 62 or 63 during the year. That rule is on the IRS's catch-up contributions page. If you're in that window and your 2026 wages clear the threshold, the whole super catch-up has to go in as Roth.
Who Is Exempt: New Hires, Self-Employed and Solo 401(k) Owners, and Job Switchers
New hires
If you start a new job in 2027, that employer paid you nothing in 2026, so your prior-year FICA wages from it are $0. You generally aren't subject to the Roth requirement there in your first year. Wages aren't annualized, so a mid-2026 hire who earned less than the threshold from that employer in 2026 is also outside the rule for 2027. Rehires can be different, because prior-year wages from the same employer still count.
Self-employed people and solo 401(k) owners
The test uses FICA wages. Sole proprietors and partners pay self-employment tax, not FICA, on their business income, so they generally have no FICA wages and aren't covered by the requirement. If you run an S corporation and pay yourself a W-2 salary, that salary is FICA wages and counts.
People who switched jobs in 2026
Say you earned $180,000 at Company A through August 2026 and then moved to Company B, which paid you $60,000 for the rest of the year. For your 2027 contributions to Company B's plan, the test generally looks at the $60,000 Company B paid you, not your combined $240,000. Remember that the base deferral limit is per person, not per plan (see the IRS 401(k) limits page), so contributing at both jobs in the same year means watching your combined total.
What Happens If Your Employer's Plan Has No Roth Option
This is the case that gets missed most often. Under the final regulations, a plan without a Roth feature can still offer catch-ups to employees under the threshold. It can't let employees who are subject to the Roth requirement make any catch-up contributions.
For a 56-year-old earning $190,000 in a pre-tax-only plan, that means losing a projected $8,500 a year of catch-up room in 2027. Many large employers added Roth to avoid this, but some small plans haven't. If yours hasn't:
- Ask HR whether a Roth feature is coming and when it takes effect.
- Max the base deferral anyway. That part is unaffected.
- Look at the alternatives below: an HSA, a backdoor Roth IRA, or a taxable brokerage account.
The Tax Math: Roth vs. Pre-Tax Catch-Up at the 24%, 32% and 35% Brackets
A pre-tax contribution lowers this year's taxable income. A Roth contribution doesn't. The extra federal tax you pay now is roughly your catch-up amount times your marginal bracket. For reference, the 2026 brackets start above $105,700 (24%), $201,775 (32%) and $256,225 (35%) of taxable income for single filers. For joint filers they start above $211,400, $403,550 and $512,450 (IRS). The 2027 thresholds will be adjusted for inflation.
| Catch-up made as Roth | 24% bracket | 32% bracket | 35% bracket |
|---|---|---|---|
| $8,500 (projected age 50+ catch-up) | $2,040 | $2,720 | $2,975 |
| $11,750 (projected age 60–63 catch-up) | $2,820 | $3,760 | $4,113 |
| Per paycheck on $8,500 (26 pay periods) | ~$78 | ~$105 | ~$114 |
These figures are the extra federal income tax paid now compared with making the same catch-up pre-tax. State income tax may add to the cost.
Worked example. Dana is 57, single, and earned $172,000 in 2026 Box 3 wages. In 2027 she defers the projected $25,500 base pre-tax and $8,500 as a Roth catch-up. Her taxable income is in the 24% bracket, so the Roth catch-up costs her about $2,040 more in federal tax for 2027 than a pre-tax catch-up would have. Her take-home pay drops by about $78 per biweekly check compared with 2025. In exchange, that $8,500 and its growth can come out tax-free in retirement if she meets the qualified-distribution rules.
Whether this is a good trade depends on your bracket in retirement. If you expect to be in a lower bracket later, being forced into Roth costs you something. If you expect similar or higher rates, or want some tax-free money to draw on alongside your pre-tax savings, it can work in your favor. Either way, keep making the catch-up. Skipping it costs you the savings and the employer plan's growth.
Your Year-End Checklist: Update Payroll Elections Before the First 2027 Paycheck
- Estimate your 2026 Box 3 wages. Use year-to-date Social Security wages on your latest pay stub, and add in any December bonus.
- Confirm your 2027 age bracket. 50–59 or 64 and over gets the regular catch-up. Turning 60–63 in 2027 gets the super catch-up.
- Ask HR three questions. Does the plan offer Roth? Does it use a "deemed Roth" election that switches catch-ups to Roth automatically? Does a separate catch-up election carry over, or does the plan spill contributions over the base limit into catch-up?
- Set your elections in the plan portal. Choose your base deferral (pre-tax, Roth or a mix) and confirm the catch-up portion is Roth if you're affected. Some plans make you choose this yourself rather than switching it for you.
- Redo your percentages once the IRS publishes 2027 limits. For example, $25,500 ÷ 26 paychecks is about $981 per check.
- Review your withholding. Roth catch-ups raise your taxable wages, so your refund may shrink. Run the IRS Tax Withholding Estimator and update your W-4 if needed.
- Check your first January pay stub. Make sure the right money lands in the Roth bucket. Payroll mistakes in the first year of a rule change are common.
Smart Moves for High Earners: Max the Base Pre-Tax, Use an HSA, Consider a Backdoor Roth
Keep the base pre-tax if that suits you. The rule only covers catch-ups. A worker in the 32% bracket who defers the projected $25,500 base pre-tax still lowers federal tax by about $8,160 for the year.
Fund an HSA if you're eligible. For 2027, the IRS set HSA limits at $4,500 for self-only and $9,000 for family coverage, plus a $1,000 catch-up at age 55 (reported from Rev. Proc. 2026-24). HSA contributions are tax-deductible, which makes up for some of the pre-tax deduction you lose on catch-ups.
Consider a backdoor Roth IRA. Direct Roth IRA contributions phase out in 2026 between $153,000 and $168,000 of modified AGI for single filers and between $242,000 and $252,000 for joint filers (IRS). Above those levels, some people make a nondeductible traditional IRA contribution and convert it, reporting it on Form 8606. If you hold other pre-tax IRA money, the pro-rata rule can make part of the conversion taxable, so get help first.
Clear expensive debt first. If you're carrying credit card balances at 20%-plus, paying them off is a guaranteed return that beats most investment choices. A structured plan like this 7-step debt payoff plan can free up cash for retirement later.
Frequently Asked Questions
I earned almost exactly $150,000 in 2025. Does the Roth catch-up rule apply to me?
The law applies to wages that exceed the threshold, so earning right at the line is the edge case. Your plan administrator decides who is covered using your W-2 Box 3 wages, so ask HR how your plan treats your exact figure.
I have two jobs. Are my wages combined for the test?
Generally, no. Each plan looks at wages from the employer that sponsors it. The final rules let a plan combine wages from certain related employers, such as those using a common paymaster, but pay from an unrelated second job is usually tested separately.
Does the Roth catch-up rule apply to IRAs?
No. It covers catch-ups in workplace plans like 401(k), 403(b) and governmental 457(b) plans. IRA catch-ups are separate. For 2026 the IRA catch-up for people 50 and older is $1,100, and you choose traditional or Roth based on the usual IRA rules.
Does the rule cover 403(b) and 457 plans?
Yes for 403(b) plans and governmental 457(b) plans. Governmental plans have a later applicability date under the final regulations, so public employees should confirm their plan's start date with their benefits office.
What is a deemed Roth election?
It's a plan feature that automatically treats an affected employee's catch-up contributions as Roth, so you don't have to file a new election. Not every plan uses it. If yours doesn't, you may need to choose Roth for your catch-up yourself, or your catch-up may stop.
I'm self-employed with a solo 401(k). Am I affected?
Usually not. Sole proprietors and partners have self-employment income rather than FICA wages, so the requirement generally doesn't apply. If you pay yourself a W-2 salary through an S corporation, that salary counts as FICA wages and could trigger the rule.
Can I still make my regular 401(k) contributions pre-tax?
Yes. The rule only affects catch-up contributions. Your base deferral, projected at about $25,500 for 2027, can still be pre-tax, Roth or a mix, depending on what your plan offers.
When will the IRS announce the official 2027 limits?
The IRS usually publishes next year's retirement plan limits in late October or November. Until then, the 2027 figures in this article are projections. Adjust your payroll percentages once the official notice is out.
Sources
- IRS IR-2025-111: 2026 401(k) and IRA limits
- IRS Notice 2025-67: 2026 retirement plan amounts
- IRS: Final regulations on the Roth catch-up rule
- Federal Register: Catch-Up Contributions (T.D. 10033)
- IRS: Retirement topics, catch-up contributions
- IRS: 401(k) contribution limits
- IRS: 2026 tax brackets
- IRS: Roth comparison chart
- Mercer: 2027 retirement plan limit projections
- Forbes: Projected 2027 401(k) limits
- PLANSPONSOR: 2027 HSA limits (Rev. Proc. 2026-24)
Disclaimer: This article is educational information only and is not financial, tax or legal advice. Check your plan documents and talk to a qualified professional before making decisions.
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