Resulting from The SECURE Act of 2022 (SECURE 2.0), high income earners in owner-only businesses will now be required to apply catch-up contributions to their solo 401k plan as Roth (designated Roth contributions) instead of pretax. This provision was originally effective starting January 1, 2024 but has now been delayed by the IRS issued Notice 2023-62 January 01, 2026.
Beginning in 2026, if your wages are higher than $145,000, any catch-up contributions you make to the solo 401k plan will have to be made as a designated Roth solo 401k contribution; therefore, you won’t get a tax deduction.
As a reminder, employees who are 50 and older are allowed to contribute additional money to their employer-sponsored retirement plan, known as a catch-up contribution. For 2024, the catch-up contribution is an extra $7,500 on top of the $23,000 limit for everyone else, for a total limit of $30,500.
Effective January 2026: Two Groups for Making Solo 401k Catch-Up Contributions
Beginning on January 1, 2026, those age 50 or older will fall into one of two categories:
- Solo 401k owners making less than $145,000 can continue making catch-up contributions to their pre-tax solo 401k plans.
- Solo 401k owners making $145,000 or more will have to put their solo 401k catch-up funds in a Roth solo 401k-the contributions will not be tax deductible, but the funds will grow tax free with no taxes due when distributed at retirement age.
For Years 2024 and 2025
While the requirement for higher income earners to make solo 401k catch-up contributions as Roth solo 401k contributions has been delayed to January 01, 2026 during two-year delay as an administrative transition period, solo 401k owners still have the option to make the 2024 and 2025 catch contributions as Roth solo 401k contributions but are not required to do so.
Lastly, since the solo 401k plan offered by My Solo 401k Financial LLC already allows for Roth solo 401k and catch-up contributions, it is already operationally compliant to allow for these new catch up contribution changes.
