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Enter payroll checks

Mandatory Roth contributions calculations

Mandatory Roth contributions start as pre-tax up to the standard limit, with excess eligible contributions redirected as Roth catch-up if prior-year FICA wages exceed $150,000. These are automatically allocated to the linked Roth deduction item.
When an employee is set up as described for mandatory Roth catch-up contributions, Accounting CS calculates the contributions as follows:
  1. The traditional retirement plan 1st calculates up to the standard contribution limit. These amounts are treated as pre-tax for tax purposes.
  2. Once the standard contribution limit is reached:
    1. Any additional eligible contributions, based on the employee’s age, are calculated as Roth catch-up contributions on the current and any future checks.
    2. The catch-up contributions are automatically redirected and stored in the linked Roth 401(k) or Roth 403(b) deduction item on the check.

Calculation examples

In the following examples, assume the year is 2026 so the following contribution limits apply.
Age
Regular limit
Catch-up
Total
Under 50
$24,500
$0
$24,500
50-59 or 64+
$24,500
$8,000
$32,500
60-63
$24,500
$11,250
$35,750

Example 1

The employee is age 55 and had prior‑year FICA wages at or below $150,000. As a result, the employee is eligible to make pre‑tax catch‑up contributions, as the mandatory Roth catch‑up requirement doesn't apply.
The employee has a single traditional 401(k) deduction configured at 10% of gross pay. The prior year‑to‑date (YTD) amount withheld for the 401(k) contributions is
$24,400
.
Current Payroll Check Details:
  • Gross pay: $2,500.00
  • 401(k) contribution: $250.00
Contribution breakdown:
  • $100.00 brings the employee to the annual 401(k) contribution limit of $24,500 and is treated as a pre‑tax traditional 401(k) contribution.
  • The remaining $150.00 is applied toward the $8,000 age 50-59 or 64+ catch‑up contribution limit. Because the employee’s prior‑year FICA wages were at or below $150,000, this amount isn't subject to mandatory Roth treatment and is also treated as a pre‑tax catch‑up contribution.

Example 2

The employee is age 62 and had prior‑year FICA wages exceeding $150,000. As a result, the mandatory Roth catch‑up requirement applies to this employee.
The employee has a traditional 401(k) deduction configured at 10% of gross pay. In addition, the employee has a Roth 401(k) deduction item that is linked to the traditional 401(k) deduction item to support mandatory Roth catch-up contributions. The prior year‑to‑date (YTD) amount withheld for the 401(k) contributions is
$24,400
.
Current Payroll Check Details:
  • Gross pay: $2,500.00
  • Traditional 401(k) contribution: $100.00
  • Roth 401(k) contribution: $150.00
Contribution breakdown:
  • $100.00 brings the employee to the annual 401(k) contribution limit of $24,500 and is treated as a pre‑tax regular 401(k) contribution.
  • The remaining $150.00 is applied toward the $11,250 age 60-63 catch‑up contribution limit. Because the employee’s prior-year FICA wages exceeded $150,000, this amount is subject to mandatory Roth treatment. As a result, the contribution is allocated to the Roth 401(k) deduction item and treated as a Roth catch‑up contribution.
Next Payroll Check Details:
  • Gross pay: $2,500.00
  • Traditional 401(k) contribution: $0.00
  • Roth 401(k) contribution: $250.00
Contribution breakdown:
  • The employee has already reached the annual 401(k) contribution limit of $24,500; therefore, the traditional 401(k) deduction item will calculate $0.00.
  • The full $250.00 is applied toward the $11,250 age 60-63 catch‑up contribution limit. Because the employee’s prior-year FICA wages exceeded $150,000, this amount is subject to mandatory Roth treatment. As a result, the contribution is allocated to the Roth 401(k) deduction item and treated as a Roth catch‑up contribution.

This article applies to:

  • Product: Accounting CS
  • Subject: Payroll checks

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