Roth catch-up video

Uplifting music plays throughout.

A group of employees standing in an office building observe a calendar turning the page to reveal January 1, 2026.

Narrator [00:00:00] As of January 1, 2026, a new rule under the Secure 2.0 Act takes effect. If you're age 50 or older and earned more than $150,000 in FICA wages last year, your retirement plan catch-up contributions must be made as Roth.

Graphics appear to illustrate the Secure 2.0 Act. A birthday cake representing the 50 years or older age requirement, and a W-2 form representing the $150,000 in FICA wages. After, a piggy bank with the words "Roth 401(k)" on its side appears.

Narrator [00:00:18] Catch-up contributions are a way for people over 50 to contribute to their employer-sponsored retirement accounts above normal limits. Here's what that means for you.

To illustrate catch-up contributions, we show two side-by-side gauges labeled with a dollar sign ($): one for traditional contributions and one for catch-up contributions. The traditional gauge stops at the contribution limit, while the catch-up gauge surpasses it.

Narrator [00:00:26] If you earned $150,000 or less in the last calendar year, you could keep choosing pre-tax or Roth for your catch-up contributions. But if you earned more than $150,000, all your catch-up contributions must be made as Roth. Roth contributions are made after taxes.

We then fade to a graphic of a woman sitting at a computer, reviewing her annual paycheck of $130,000 and options for catch-up contributions she can make—either pre-tax or Roth. Her mouse hovers over both options.

The shot pans over to another man sitting at a computer next to the woman's, reviewing his annual paycheck for $165,000. His only option for catch-up contributions is Roth.

Narrator [00:00:45] That means you might see less take-home pay today...but when you retire, qualified withdrawals from Roth accounts can be tax-free. That gives you greater flexibility and the potential for more net income later in life.

The man's computer screen changes to an earnings breakdown. We see taxes and Roth catch-up subtracted from his monthly pay.

We fast forward to the future to see the man retired, sitting peacefully on his porch with his wife after having made tax-free withdrawals from his Roth 401(k).

Narrator [00:00:59] To recap, the rule applies if you're age 50 or older, earned more than $150,000 in FICA wages the previous year—adjusted annually for inflation—and make catch-up contributions to your employer retirement plan.

To represent the rules, we see a woman holding a 50th birthday cake, representing age 50 or older. We pan over to see a man celebrating a promotion while holding a check for $150,000. Finally, we pan over to a woman inserting money into a piggy bank labeled Roth 401(k).

Narrator [00:01:13] What should you do now? Review your current retirement plan contributions and wages to see if you're affected by this change.

We see a man sitting at a computer reviewing a chart of his retirement contributions and wages, and clicking a learn more button.

Narrator [00:01:21] Learn how Roth contributions work and how they fit into your overall savings strategy. And if the new rules apply to you, you may need to update your contribution elections before January 2026 to help keep on track and avoid surprises.

We see him review an article titled "What is a Roth 401(k)?" and then click a button called "Update Contributions." The screen changes to a form where the man changes the percentage of his paycheck contributed to Pre-tax and Roth.

Narrator [00:01:35] Roth catch-up contributions may be a requirement, but it's also an opportunity. By planning ahead, you can turn this change into a powerful tool for building tax-free income in retirement.

A young man walks into a room labeled "From Requirement." We then cut to a retired couple exiting another door labeled "To Opportunity." This door is in an airport terminal, and they both are carrying luggage with them. They ascend an escalator and we see various world landmarks behind them as they travel the world in their retirement.

The camera pans up from the traveling retirees, and we see the Charles Schwab logo and an airplane appear in the clear sky above, followed by the Schwab tagline "Own your tomorrow."

Narrator [00:01:47] Make the most of your income by owning your tomorrow today.

Music stops, brand music plays.

Schwab Retirement Plan Services, Inc. provides recordkeeping and related services with respect to retirement plans and has provided this communication to you as part of the recordkeeping services it provides to the Plan.

The material contained herein is proprietary to Schwab Retirement Plan services. This information is not a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager, Estate Attorney) to help answer questions about specific situations or needs prior to taking any action based upon this information.

This hypothetical example is only for illustrative purposes.

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