This article is for benefits admins and employers. Learn how a new regulation affects catch-up contributions for high earners with 401(k) or 403(b) plans starting in 2026.
This regulation applies to you if your company offers catch-up contributions for employees 50 or older.
You may be asked to provide information about how your plan handles this regulation when you set up benefits, edit existing benefits, update employee deduction limits, or complete tasks on your homepage.
Starting in 2026, catch-up contributions to 401(k) or 403(b) plans must be Roth (post-tax) instead of traditional (pre-tax) for high earners. This affects employees who meet all of these criteria:
They are 50 or older by the end of the year.
Their company's plan supports catch-up contributions.
They earned more than $150,000 in Social Security wages (Box 3 of W-2) with your company in 2025
This regulation takes effect for the first payroll in 2026 with a check date in 2026.
Contribution limits for 2026:
Standard limit: $24,500
Catch-up contribution limit (for employees 50 or older): additional $8,000
Total possible contribution: $32,500
When and how catch-up contributions are moved to Roth
Retirement providers handle this regulation in different ways:
Automatic vs. manual: Some providers automatically move excess contributions to Roth. Others block excess contributions and require employees to manually elect Roth contributions with their provider. You may see a task on your Gusto homepage to confirm how your plan handles this.
Timing: Some providers redesignate once an employee hits the standard limit (regardless of how much was already Roth). Others wait until the employee hits the standard limit through pre-tax contributions only. Gusto processes contributions using the second approach for both integrated and third-party plans added to Gusto.
You have a third-party plan if you manually enter 401(k) or 403(b) deductions in Gusto. Contact your retirement provider if you have questions about how they handle this regulation.
Check your Gusto homepage for any tasks related to catch-up contributions. If action is needed from you, you'll see tasks asking you to:
Tell us how your plan handles catch-up contributions for high earners (automatically or manually).
Confirm prior year wages for some employees if we do not have that information.
Gusto automatically calculates who qualifies as a high earner based on their prior year Social Security wages. We'll only ask you to confirm wages if we do not already have that data.
Important: If you do not complete these tasks, affected employees will be limited to the standard contribution limit ($24,500 for 2026) and cannot make catch-up contributions.
If your plan automatically moves catch-up contributions to Roth, make sure you've set up a Roth 401(k) or 403(b) in Gusto and added affected employees to it. Without a Roth benefit, we cannot process their catch-up contributions.
If your plan automatically moves catch-up contributions to Roth:
When an affected employee's contributions would exceed the standard limit, we automatically move the excess to their Roth benefit.
When an employee over 50 who is not a high earner exceeds the standard limit, their catch-up contributions are still applied pre-tax.
If the employee does not have a Roth benefit set up, we'll block the excess contributions.
If your plan requires manual handling:
When an affected employee's contributions would exceed the standard limit, we'll block the excess contributions.
The employee needs to update their elections with your retirement provider to contribute to Roth instead.
You'll then update their benefit elections in Gusto to reflect the change.
This section applies to you if your 401(k) or 403(b) is integrated with Gusto through your App directory. Your employees’ deductions sync automatically with your retirement provider.
Check your Gusto homepage for any tasks about confirming employee wages. You may see tasks asking you to confirm prior year wages for some employees if we do not have that information. Gusto automatically calculates who qualifies as a high earner based on their prior year Social Security wages. We'll only ask you to confirm wages if we do not already have that data.
Your retirement provider controls everything else. Contact your retirement provider if you have questions about how they handle this regulation.
Important: If you do not complete these tasks, affected employees will be limited to the standard contribution limit ($24,500 for 2026) and cannot make catch-up contributions.
Your retirement provider tells us how to handle catch-up contributions for high earners. We follow their instructions automatically.
If your provider automatically moves catch-up contributions to Roth:
When an affected employee's contributions would exceed the standard limit, we automatically move the excess to their Roth benefit.
When an employee over 50 who is not a high earner exceeds the standard limit, their catch-up contributions are still applied pre-tax.
Your provider is responsible for making sure the employee has a Roth benefit set up.
If your provider does not automatically move catch-up contributions to Roth:
When an affected high earner's contributions would exceed the standard limit, we'll block the excess contributions.
The employee needs to work with your retirement provider to set up Roth contributions.