5. The “Roth Catch-Up” Trap for High Earners
Starting in 2026, a new rule will force high-income earners to change how they save. If you earned more than $145,000 (indexed for inflation to >$150,000 for the 2026 tax year) in FICA wages from your employer in the previous year, your catch-up contributions must be made to a Roth account.
This means:
- You pay taxes on that catch-up money now, not later.
- You lose the immediate tax deduction on those specific contributions.
- Your money grows tax-free for the future.
The Mistake: If your employer doesn’t offer a Roth 401(k) option and you are a high earner subject to this rule, you might be blocked from making catch-up contributions entirely until the plan is amended.
Action Step: If you are a high earner, verify with your HR department that your plan supports Roth contributions before January 2026 arrives.
