Dana Rivera is finishing 2025 with $165,000 of W-2 wages and a 401(k) plan that already offers both designated Roth contributions and catch-up contributions, and Dana wants a clean 2026 action plan.
What changes in 2026 is not just the dollar cap. The payroll setup can force the catch-up portion to be Roth based on prior-year FICA wages, so a client who expects to split pre-tax and Roth might discover the plan has to route catch-ups one way to stay compliant.
Before we compute anything, we need to place Dana’s situation on the effective-date timeline that drives what the plan can do in 2026 and what it must do. Use the timeline to mark the three items that touch Dana’s 2026 decision. Then we can measure against the right year’s rule:
When Dana asks, “Do I have to take distributions yet, and can I keep money in the Roth 401(k) without lifetime RMDs,” the practical problem is choosing the correct starting and ongoing distribution rules for the account type and the individual. The governing required minimum distribution framework sits in IRC §401(a)(9), and for designated Roth accounts in employer plans, SECURE 2.0 removed lifetime RMDs beginning in 2024, which changes how we phrase the distribution plan for someone who prefers to keep Roth dollars growing.
When the question is “How much can I defer from my paycheck for 2026, and what counts as a catch-up,” the business issue is payroll stopping rules and the risk of excess deferrals. The base elective deferral limit is governed by IRC §402(g), the ability to exceed it with catch-up contributions is governed by IRC §414(v), and the annual dollar amounts that apply for 2026 are the COLA-updated limits published by the IRS in IRS Notice 2025-67.
When the question is “Do my catch-ups have to be Roth,” the operational issue is that the plan must apply a prior-year wage test at the employer level and then code contributions correctly in payroll feeds. SECURE 2.0 section 603 added a mandatory Roth-only treatment for catch-up contributions for participants whose prior-year FICA wages exceed the indexed threshold, and the 2026 determination uses 2025 FICA wages.
Practice tip When a rule is effective-date-driven, the first workpaper is a dated yes or no matrix.
Given Dana’s 2025 wages of $165,000 and birth year 1963, which 2026 outcome fits the facts, max deferral only, max plus catch-up, and is the catch-up allowed to be pre-tax. Commit to the treatment before we compute the cap and the Roth-only flag. Here is the fact pattern flowing to the outputs: