Is $150,000 the limit on 2025 FICA wages before a participant must make 2026 age-based-catch-up elective deferrals as Roth contributions?

Internal Revenue Code § 414(v)(7)(A) sets $145,000 (inflation-adjusted) as the limit on a preceding year’s FICA wages for a participant not to be constrained to make age-based-catch-up elective deferrals as Roth contributions.

Here’s the “Cost of living adjustment” provision: “In the case of a year beginning after December 31, 2024, the Secretary shall adjust annually the $145,000 amount in subparagraph (A) for increases in the cost-of-living at the same time and in the same manner as adjustments under [I.R.C. §] 415(d); except that the base period taken into account shall be the calendar quarter beginning July 1, 2023, and any increase under this subparagraph which is not a multiple of $5,000 shall be rounded to the next lower multiple of $5,000.” I.R.C. § 414(v)(7)(E) https://www.taxnotes.com/research/federal/usc26/414?highlight=414.

Assuming all relevant years are calendar years:

I estimate that, for 2025 FICA wages to drive how § 414(v)(7) applies for 2026, the $145,000 will become $150,000.

BenefitsLink neighbors, is this likely?

Or would a § 415(d)-method calculation come out differently?

Some employers (those with relatively few to-be-affected employees) now are estimating which people will no longer have a non-Roth choice for a portion of one’s elective deferrals.

Here’s the statute subsection I.R.C. § 414(v)(7)(E) refers to:

Internal Revenue Code of 1986 § 415(d)

Cost-of-living adjustments.

(1) In general. The Secretary shall adjust annually—

(A) the $160,000 amount in subsection (b)(1)(A),

(B) in the case of a participant who separated from service, the amount taken into account under subsection (b)(1)(B), and

(C) the $40,000 amount in subsection (c)(1)(A),

for increases in the cost-of-living in accordance with regulations prescribed by the Secretary.

(2) Method. The regulations prescribed under paragraph (1) shall provide for—

(A) an adjustment with respect to any calendar year based on the increase in the applicable index for the calendar quarter ending September 30 of the preceding calendar year over such index for the base period, and

(B) adjustment procedures which are similar to the procedures used to adjust benefit amounts under section 215(i)(2)(A) of the Social Security Act.

(3) Base period. For purposes of paragraph (2)--

(A) $160,000 amount. The base period taken into account for purposes of paragraph (1)(A) is the calendar quarter beginning July 1, 2001.

(B) Separations after December 31, 1994. The base period taken into account for purposes of paragraph (1)(B) with respect to individuals separating from service with the employer after December 31, 1994, is the calendar quarter beginning July 1 of the calendar year preceding the calendar year in which such separation occurs.

(C) Separations before January 1, 1995. The base period taken into account for purposes of paragraph (1)(B) with respect to individuals separating from service with the employer before January 1, 1995, is the calendar quarter beginning October 1 of the calendar year preceding the calendar year in which such separation occurs.

(D) $40,000 amount. The base period taken into account for purposes of paragraph (1)(C) is the calendar quarter beginning July 1, 2001.

(4) Rounding.

(A) $160,000 amount. Any increase under subparagraph (A) of paragraph (1) which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000. This subparagraph shall also apply for purposes of any provision of this title that provides for adjustments in accordance with the method contained in this subsection, except to the extent provided in such provision.

(B) $40,000 amount. Any increase under subparagraph (C) of paragraph (1) which is not a multiple of $1,000 shall be rounded to the next lowest multiple of $1,000.

https://www.taxnotes.com/research/federal/usc26/415?highlight=415.

And here’s the Treasury’s implementing rule:

26 C.F.R. § 1.415(d)-1 https://www.ecfr.gov/current/title-26/section-1.415(d)-1.

Here’s a convenient table of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W):

https://www.ssa.gov/oact/STATS/cpiw.html.

In last November’s notice, the IRS told us the indexing didn’t reach the $5,000 rounding interval.

It seems next November the IRS’s notice will say $145,000 adjusts to $150,000 (as the measure of 2025 FICA wages that drives whether 2026 age-based-catch-up elective deferrals must not be non-Roth contributions).