Beginning January 1, 2026, individuals aged 50 or older who earned more than $150,000 in W-2 wages in the prior year must make any catch-up contributions to their 401(k) plan as Roth (after-tax) contributions.
However, for many Single(k) plan sponsors, this rule will not apply, it depends on how your income is reported.
Who This Applies To
This rule applies only to Single(k) plan sponsors who:
- Are age 50 or older, and
- Report income from the sponsoring company on a Form W-2, and
- Earned more than $150,000 in Box 3 wages in the prior year (2025 for the first year of application, indexed annually), and
- Contribute above the annual 402(g) limit ($24,500 for 2026, indexed annually).
If you meet these criteria, you are considered a Highly Paid Individual (HPI) and must ensure that any catch-up contributions made in 2026 and beyond are Roth. Those contributions must also be properly reported as Roth deferrals on your Form W-2.
When This Rule Does Not Apply
Many of our Single(k) sponsors are self-employed individuals who report their business income on:
- Schedule C (sole proprietors), or
- Schedule K-1 (partners in a partnership).
If this applies to you:
- You are not considered an HPI, even if you earn more than $150,000, because you do not receive W-2 wages subject to Social Security (Box 3) compensation.
- You may continue to make catch-up contributions on a pre-tax or Roth basis, depending on what your plan allows.
Applying the Rule Based on Your Plan Type
Ubiquity provides two types of Single(k) plan services:
| Plan Type | Recordkeeping Support | Who Manages Contribution Setup | Roth Catch-Up Handling |
|---|---|---|---|
| Single(k) Plus | Full recordkeeping through Ubiquity | Sponsor or payroll provider manages all contributions | Ubiquity will assist with contribution recharacterizations, if required. |
| Single(k) (Document Only) | No recordkeeping services | Sponsor or payroll provider manages all contributions | You must work directly with your payroll provider or accountant to ensure Roth catch-up compliance. |
If you manage your own payroll, and you are an HPI it is your responsibility to ensure that:
- Any catch-up contributions (amounts over the 402(g) limit) are Roth, and
- Those contributions are reflected properly on your Form W-2.
Recommendation: Add a Roth Provision If Not Already Available
If your Single(k) plan does not currently allow Roth contributions, Ubiquity recommends adding this feature to provide flexibility and compliance coverage.
- The IRS has confirmed that a plan will not fail qualification or lose benefits if Roth is not available.
- However, if your plan does not allow Roth and you are an HPI, you cannot contribute above the 402(g) limit, since your catch-up contributions must be Roth beginning in 2026.
- You can add Roth to your plan, free of charge.
Adding Roth capability ensures you can continue to make the full contribution amount, including catch-up contributions, without interruption.
Summary
| If You Are… | HPI Status | Roth Catch-Up Required? |
|---|---|---|
| Sole proprietor (Schedule C) | Not an HPI | No – you may contribute pre-tax or Roth per your plan. |
| Partner (K-1 income) | Not an HPI | No – you may contribute pre-tax or Roth per your plan. |
| Corporation owner receiving W-2 wages | HPI if age 50+ and earned >$150,000 W-2 Box 3 | Yes – catch-up contributions above 402(g) limit must be Roth. |
Need Assistance?
If you need assistance, please email us at singlek@myubiquity.com.