Key Takeaways
- Since 2026, a 401(k) saver aged 50 or older whose prior-year wages from the plan’s employer were over $150,000 can make catch-up contributions only as Roth.
- In the 35% bracket, losing the deduction on this year’s $8,000 catch-up costs $2,800 more in federal tax for the year.
- A 50-year-old forum poster has about $2.1 million saved, 97% of it pre-tax, and is deciding between all-Roth and a 50/50 split for 2027. Under the rule, part of that choice is already made.
- The final regulations on the rule generally apply to contributions from 2027, and next year’s contribution limits haven’t come out yet.
If you’re 50 or older, well paid and setting your 401(k) contributions for next year, part of that decision may already be made for you.
Since the start of 2026, higher earners can make catch-up contributions only as Roth, with no upfront tax break on those dollars. That stings in a high bracket. But if nearly all your savings sit in pre-tax accounts, it may be doing you a favor.
97% pre-tax, and starting to worry
Consider a 50-year-old who posted in Reddit’s r/Bogleheads forum on Nov. 4. The poster is in the 35% federal bracket, has about $2.1 million in retirement accounts, 97% of it pre-tax, and plans to work until about 68. Employer matches keep adding to the pre-tax side, too.
For 2027, the poster is choosing between sending all their deferrals to Roth and splitting them 50/50. They worry that big RMDs will keep them in a high bracket in retirement, but as they put it, “35% feels like a lot to give up now.”
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Over $150,000, the catch-up goes in as Roth
Savers 50 and older can put more into a 401(k) than everyone else: in 2026, the regular limit is $24,500, and the catch-up adds $8,000 on top. Under the new rule, though, a worker whose prior-year wages from the employer sponsoring the plan were more than $150,000 can make catch-up contributions only as Roth, in plans that offer a Roth option. The poster’s plan does, since all-Roth is one of their two choices. Only the prior year’s wages from that one employer count, so a spouse’s paycheck, investment income and AGI don’t enter into it. The final regulations on the rule generally apply to contributions from 2027 on.
$2,800 more tax, but only against the 50/50 plan
Put in pre-tax, an $8,000 catch-up comes off taxable income. As Roth, it doesn’t, so at a 35% marginal rate, the saver pays $2,800 more in federal tax for the year (35% of $8,000).
For this poster, though, that $2,800 is extra only next to the 50/50 plan. Go all-Roth, and every dollar is taxed now anyway, so the poster pays the same with or without the catch-up rule. Go 50/50, and the $8,000 is already Roth, so the only real choice left is how to split the $24,500 base deferral.
Here’s how that works out at 2026’s limits. Split the full $32,500 of base deferral and catch-up evenly, and $16,250 goes in pre-tax, worth $5,687.50 off the tax bill at 35%. The other $16,250 is Roth: the $8,000 catch-up plus $8,250 of the base deferral. So nearly half the Roth money in a 50/50 split is the catch-up the poster has no say over.
First, check last year’s paycheck
Before splitting anything, the poster needs one number: their 2026 wages from their employer, since 2026 is the prior year for 2027 contributions. In 2026, the 35% bracket starts above $256,225 of taxable income for a single filer, so a single poster whose income is mostly salary from one job is well over $150,000. For a married couple filing jointly, it starts above $512,450. If the poster’s spouse earns most of that, the poster’s own wages could come in under $150,000, and the poster can still pick pre-tax or Roth for the catch-up.
Here’s where I land: in the poster’s shoes, I’d take the 50/50 split over all-Roth. With 18 more years of work ahead and matches still flowing to the pre-tax side, the RMD worry is real, and the Roth catch-up plus $8,250 of the base deferral gets the Roth side growing every year. But a 35% deduction on the other $16,250 is a lot to hand back early, when there’s no telling yet what bracket the poster will be in once RMDs start.
Next year’s limits are due soon, too. The IRS put out this year’s on Nov. 13, 2025, so 2027’s catch-up limit could look different from this year’s.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
