A SECURE 2.0 Act provision that finally took effect in 2026 changes how catch-up retirement contributions work for higher earners — but because it's based on W-2 wages, its effect on the self-employed depends entirely on how your business is structured.
The rule in plain terms
Starting in 2026, anyone age 50 or older whose FICA wages exceeded $150,000 in the prior year must make any catch-up retirement contributions as Roth (after-tax) contributions, rather than pre-tax, if their plan offers a Roth option at all — and if it doesn't, they may be unable to make catch-up contributions to that plan until it does.
Why this rule barely touches most sole proprietors
The rule is keyed specifically to FICA wages — the wages reported in Box 3 of a Form W-2. A sole proprietor or single-member LLC with no employees doesn't issue themselves a W-2 at all; their income is self-employment profit, not FICA wages, so this particular mandate generally does not apply to their Solo 401(k) catch-up contributions.
Where it does apply: S-corp freelancers paying themselves a salary
If you've elected S-corp tax treatment and pay yourself a W-2 salary above $150,000, this rule applies to you directly. Your catch-up contributions to your own Solo 401(k) must be made as Roth contributions starting in 2026, which means paying tax on that portion of the contribution now instead of deferring it — a real change in tax timing worth planning around before year-end.
The planning question this raises
For an S-corp freelancer near the $150,000 wage threshold, the salary-versus-distribution split you already run for self-employment tax purposes now has a second consideration: a slightly lower reasonable salary might keep you under the threshold in some years, while a higher one accelerates income into taxable Roth catch-up contributions in others. This is a nuanced, individual calculation worth running with a tax professional rather than adjusting salary purely to dodge this one rule.
Frequently asked questions
Does this rule affect regular (non-catch-up) retirement contributions?
No — it applies only to the catch-up portion of contributions made by savers 50 and older; regular contributions up to the standard limit are unaffected regardless of income.
What happens if my Solo 401(k) plan doesn't offer a Roth option?
If your plan doesn't allow Roth contributions and you're subject to this rule, you may be unable to make any catch-up contribution to that plan until the plan is amended to add a Roth feature.
Is this based on this year's wages or last year's?
The $150,000 threshold looks at your FICA wages from the prior calendar year to determine whether the Roth catch-up requirement applies to the current year.