If you're a high-earning executive or professional, two of the most significant 401k rule changes in the last two decades just went into effect, and they're going to impact your 2025 and 2026 tax bills in very different ways.
One change opens up a major new savings opportunity. The other? It forces you to pay thousands more in taxes, whether you like it or not.
The key is understanding how these two rules intersect and what you need to do right now to stay ahead on your payroll system.
Thanks to the SECURE Act 2.0, there's a brand new "super catch-up" contribution available for a specific age group starting in 2025.
If you're between the ages of 60 and 63, and your employer's plan has adopted this feature (many have), you can contribute significantly more than the standard catch-up amount.
This is actually a sensible piece of legislation. Age 60-63 is typically when:
That's a lot of extra savings capacity—and if you can max it out, you absolutely should. If you're a Quarry Hill client, we're already watching to see if this option becomes available for you.
Now let's talk about the second change - the one that's going to increase your tax bill.
First, a quick refresher on Roth contributions: With Roth, you pay taxes upfront when you contribute, then withdraw the money tax-free in retirement. Most people love this because they know their retirement accounts will be tax-free.
However, if you're in your peak earning years, paying taxes upfront hurts. You're probably in the highest tax bracket you'll ever be in, so you're paying more in taxes now to get tax-free withdrawals later when you'll likely be in a lower bracket anyway.
This is actually a clever way the government is extracting more tax revenue without technically raising tax rates.
Here's the rule: Starting January 1, 2026, if you're a high earner, you'll be forced to make ALL of your 401k catch-up contributions on an after-tax Roth basis, whether you want to or not.
This eliminates the traditional pre-tax catch-up option for a massive group of high earners. It's not optional, and for many people, it will mean thousands of additional taxes starting in 2026.
The mandatory Roth rule affects you if you meet ALL three of these criteria:
Important detail: This is based on your FICA (Social Security) wages, not your total income. You can find this number in Box 3 of your W-2.
Remember: If you have a large bonus or equity grant that vests in 2025, that could push you over the $150,000 line and subject you to this mandatory Roth rule for all of 2026.
Here's something crucial: this is a cliff, not a slope.
One dollar makes all the difference.
If you have any control over your income timing and you're right at that $150,000 threshold, you might want to keep a very close eye on it.
Planning nuance: This rule applies separately per employer. For those rare individuals with two or more unrelated jobs where neither employer pays you more than $150,000 individually, the Roth mandate doesn't apply—even if your total income is much higher.
The super catch-up feature continues in 2026, but the mandatory Roth rule hits it directly.
But here's the problem: If you're a high earner making over $150,000 in wages and you want to use that full super catch-up, the entire catch-up portion ($11,250) must be made on a Roth basis.
And if you have the money to max out the super catch-up, you're probably in a high tax bracket.
Tax impact example: For someone in the 32% federal tax bracket, that $11,250 Roth contribution means paying an extra $3,600 in federal taxes (plus state taxes) just to access the benefit.
Is it still worth maxing out? Absolutely; it's still probably your best retirement savings option. Just don't expect the tax deduction you're used to, and make sure you budget for the extra tax bill.
Here's one more caveat: Not all employers are prepared for this change.
The 2026 mandatory Roth rule is an administrative nightmare that's forcing companies to figure out how to:
Some companies are considering three options:
We're right at the end of the year, and many HR departments are scrambling to implement these changes.
The reality is that tax planning just became even more critical for high earners.
Here's what you need to consider:
If you're working with Quarry Hill Advisors, don't worry—we're already monitoring these changes for our clients and will proactively help you navigate them.
These two rule changes (the super catch-up opportunity and the mandatory Roth conversion) represent some of the most significant shifts in 401k policy we've seen in decades.
For high earners, the message is clear: You can save more than ever before, but you'll pay more in taxes to do it.
The winners will be those who plan ahead, understand the nuances, and work with their advisors to optimize their strategy before the 2026 deadline hits.
Ready to find out if we're the right fit for your financial planning needs? Schedule a complimentary discovery meeting where we'll provide a real assessment of how we can help your specific financial situation.
-A note from Bjorn Amundson, CFP®
This material is intended for educational purposes only. You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. Nothing contained in the material constitutes a recommendation for purchase or sale of any security, investment advisory services or tax advice. The information and opinions expressed in the linked articles are from third parties, and while they are deemed reliable, we cannot guarantee their accuracy.