If you are age 50 or older and your prior-year Federal Insurance Contributions Act (FICA) taxable earnings exceed $150,000, new IRS regulations under the SECURE 2.0 Act require that any catch-up contributions be designated as Roth (after-tax) contributions.
What does this mean for you?
- No upfront tax deduction: You will no longer receive an upfront pre-tax deduction on your catch-up contributions.
- Tax-free growth & withdrawals: Your Roth contributions and their investment earnings can be withdrawn completely tax-free in retirement, provided you satisfy the standard 5-year holding requirement.
How the rule Is applied
- Timing and earnings basis: Applicability is based on your prior-year Form W-2 earnings with your current employer. For example, if your FICA-taxable earnings meet or exceed $150,000 in tax year 2025, the mandatory Roth rule applies to your 2026 catch-up contributions.
- Earnings under $150,000: If your FICA earnings are below $150,000, you remain unaffected and may continue directing catch-up contributions to a traditional (pre-tax) account, a Roth account, or a combination of both.
2026 contribution limits at a glance
- For 2026, the maximum contribution amount for all 401(k) savers regardless of age is $24,500.
- Your contributions would be separate from any matching funds your employer may contribute and do not count toward your own contribution limit for the year. However, there is an aggregate employee and employer contribution limit. That limit is $72,000 for 2026.
Where to find more information
- UCOR HUB website: Navigate to Employee Reference > Benefits > United Cleanup Oak Ridge Retirement Savings Plan 401(k) Quick Reference.
- Fidelity Investments: Call 1-800-835-5095 or log in to netbenefits.com.
Important reminder: Changes made to your 401(k) payroll deductions generally take up to two weeks to take effect. Please monitor your pay statements regularly to verify adjustments.
