Why Is My Employer Fixing My 401(k) Catch-Up Contributions?
Spoiler alert: It probably isn’t because you did anything wrong.
Did you recently receive a notice that your 401(k) catch-up contributions need to be corrected?
If your first thought was, “Wait… did I mess something up?” that’s a completely common question.
The good news is that, in most cases, the answer is no.
These corrections are usually administrative and are made to comply with updated laws (Secure 2.0).
What changed?
Beginning in 2026, certain employees who earned more than the IRS income threshold in the prior year can no longer make pre-tax catch-up contributions.
Instead, those catch-up contributions must be made as Roth contributions.
If your payroll system continued taking those catch-up dollars out as pre-tax, your employer may need to correct them.
Q. What is a catch-up contribution?
Once you reach the IRS catch-up age, you’re allowed to contribute more to your 401(k) than younger employees.
These extra contributions are called catch-up contributions.
For some higher-income employees, those catch-up dollars now have to go into the Roth bucket instead of the pre-tax bucket.
Q. Did I do something wrong?
No.
In most cases, employees simply elected to contribute to their 401(k) like they always have.
The correction is usually because payroll, the retirement plan, or administrative processes need to comply with the new IRS rules.
Q. Will I owe more taxes?
Possibly.
Because Roth contributions are made after taxes, correcting pre-tax contributions may affect your taxable income.
Your employer or plan administrator should explain how the correction will work.
Q. Why can’t they just leave it alone?
401(k) plans have to follow IRS rules.
If contributions were made incorrectly, the employer generally needs to correct the error to keep the plan compliant.
Q. What should I do?
Usually…
- Read any communication your employer sends.
- Ask questions if something isn’t clear.
- Don’t panic.
Most corrections are administrative and have established processes for resolving them.
Key Takeaway
Receiving a notice that your 401(k) needs to be corrected doesn’t automatically mean there’s a problem with your retirement savings.
In many cases, it’s simply your employer making sure the plan follows updated IRS rules.
401kschool.com makes retirement plan rules easier to understand.
This article is educational and isn’t individual tax, legal, or investment advice. Your plan’s rules and your personal circumstances matter, so talk with your plan administrator, tax professional, attorney, or financial professional when needed.
