The IRS has finalized regulations that clarify how SECURE 2.0’s Roth catch-up contribution rules must be administered for many employer-sponsored retirement plans. For plan sponsors, the challenge is not only understanding what changed, but also updating payroll, recordkeeping, and plan documents while communicating clearly with participants.
The final rules also confirm a practical reality: 2026 is effectively an implementation “gap year,” and stricter enforcement applies starting on January 1,2027, but that does not mean plan sponsors can wait until the end of 2026 to start.
Below is a sponsor-focused roadmap to help you identify impacted participants, coordinate with vendors, and stay ahead of amendment deadlines.
Key Points
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High-wage employees (over $150,000 in prior-year Social Security wages) can only make Roth catch-up contributions starting in 2026.
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2026 is a good-faith transition year; full compliance and plan amendments are due by December 31, 2026.
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New “super catch-up” limits apply for ages 60-63, increasing total contribution potential.
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Payroll and recordkeeping systems must support age and wage-based Roth tracking and limits.
Highlights from the Final Roth Catch-Up Regulations
What the regulations do:
The final regulations provide operational guidance for:
- Mandatory Roth treatment of catch-up contributions for certain “high-wage” employees, referred to as highly paid participants (HPPs).
- Enhanced (“super”) catch-up contributions for participants ages 60–63.
- Administrative mechanics, including approaches to deemed Roth elections and correcting failures.
Plans most directly impacted:
The Roth catch-up requirement is most relevant for sponsors of:
- 401(k) plans
- 403(b) plans
- Governmental 457(b) plans
Important carveouts: The Roth catch-up wage threshold rule is designed around “applicable employer plans” and expressly excludes certain arrangements (notably SEP/SIMPLE) when describing the wage threshold rule mechanics.
Key Dates for Plan Sponsors
|
Date |
What happened/happens | Why it matters |
| September 16, 2025 | IRS published final catch-up contribution regulations | Establishes the definitive compliance framework |
| January 1, 2026 | End of the IRS administrative transition period and start of operational readiness expectations | Sponsors should be able to demonstrate a reasonable, good-faith approach during 2026 |
| December 31, 2026 |
Plan amendment deadline for most qualified plans (regardless if the plan operates on a calendar or a fiscal year basis), excluding governmental plans and union plans |
A hard deadline for adopting required amendments of the SECURE 2.0 Act |
| January 1, 2027 | General applicability for the Roth catch-up provisions in the final regulations | Stricter compliance posture begins for most plans |
| December 31, 2028 | Amendment deadline for plans under collective bargaining | Extended deadline for CBA/union plans |
| December 31, 2029 | Amendment deadline for governmental plans and public-school 403(b)s | Extended deadline for governmental and certain 403(b) sponsors |
Highlights from the Final Roth Catch-Up Regulations
Catch-Up Eligible Participants
- Participants can make catch-up contributions if they are age 50+ by the end of the calendar year.
"Super Catch-Up" Ages
- Participants are eligible for enhanced (super) catch-up contributions in the year they attain ages 60, 61, 62, or 63.
The "High-Wage" Rule
What is the definition of a highly paid participant (HPP) and what triggers mandatory Roth catch-ups?
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Beginning in 2026 operations, the Roth catch-up requirement is determined using prior-year FICA/Social Security wages.
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For the 2026 implementation year, the IRS confirms that:
- The Roth catch-up wage threshold for 2025 wages is $150,000, used to determine whether catch-up contributions in 2026 must be Roth for HPPs.
- The determination is based on Form W-2, Box 3 (Social Security wages).
Critical Nuance for Sponsors
- This “high-wage” test for HPPs is not the same as the traditional “highly compensated employee” (HCE) rules used for nondiscrimination testing. It’s a separate statutory mechanism with a distinct data requirement (prior-year Box 3 wages).
Owners with Self-Employment Income
- The final regulations and supporting guidance focus the HPP Roth catch-up requirement on employees with FICA wages from the plan sponsor. That means sponsors need to be careful with organizational structures (e.g., partners receiving K-1 income rather than W-2 wages).
2026 Contribution Limits that Sponsors Should Communicate
Per IRS cost-of-living adjustments for 2026:
| Limit Type | 2026 Amount |
| Elective deferral limit (402(g)) | $24,500 |
| Annual defined contribution limit (415(c)) | $72,000 |
| Standard catch-up (age 50+) | $8,000 |
| Super catch-up (ages 60–63) | $11,250 |
A 5-Step Implementation Roadmap for Plan Sponsors
Step 1: Identify eligible participants early.
Start with a clean process to identify who may be impacted in 2026, including:
- Age tracking: Flag participants who are 50+ and those in the 60–63 super catch-up window.
- Wage tracking: Build a reliable way to identify employees whose 2025 Box 3 wages exceed $150,000 (for 2026 catch-up Roth treatment).
- Source-of-income review: Confirm how owners are paid (W-2 vs. K-1) to avoid misclassification.
Practical tip: Don’t assume only employees who hit the Social Security wage base are affected. The Roth catch-up wage threshold is a separate figure and can capture employees below the maximum taxable wage base.
Step 2: Update payroll and plan systems.
For most organizations, compliance will be operationally won or lost in payroll and recordkeeping. This is where most failures occur.
Engage your vendor ecosystem early by doing the following:
- Payroll provider
- Recordkeeper
- Third-party administrator (TPA)
- ERISA counsel / benefits advisor
Your internal checklist should include the following:
- Can payroll identify eligibility using age plus the prior-year Box 3 wages?
- Can payroll route catch-up deferrals to Roth automatically for impacted employees?
- Can systems distinguish standard vs. super catch-up by age band?
- Are controls in place to monitor limits throughout the year?
Why urgency matters: the IRS did not extend the administrative transition relief beyond December 31, 2025, and expects good-faith implementation during 2026.
Step 3: Communicate with participants before “surprises” hit paychecks.
For affected employees, the change is straightforward but often unwelcome: their catch-up contributions may no longer be pre-tax.
Consider a communications plan that includes:
- A plain-English explanation of who is affected and why (age + wage rule)
- The practical impact: Roth catch-ups are after-tax
- Clear instructions on how to update deferral elections
- A reminder that this applies only to catch-up amounts, not necessarily all deferrals
This is also a strong opportunity to direct participants to financial education resources and encourage them to consult their tax advisor.
Step 4: Amend plan documents
Document work should begin now, even though the main amendment deadline is later.
A key design issue: If your plan offers catch-up contributions but does not currently offer Roth deferrals, you may need to add a Roth feature to allow impacted participants to continue making catch-up contributions as required.
Deadlines to keep in view:
- Most qualified plans: 12/31/2026
- Collectively bargained plans: 12/31/2028
- Governmental and certain 403(b) plans: 12/31/2029
Step 5: Stay current; Guidance and indexing will continue to evolve
Two realities will persist:
- The high-wage threshold is indexed, so the number will likely change over time.
- Operational interpretation matters: the IRS explicitly references reasonable, good-faith interpretation for earlier implementation, but expects stricter compliance once the regulations are generally applicable.
Assign ownership internally for the following tasks:
- Tracking IRS updates
- Coordinating vendor testing cycles
- Reviewing participant feedback and election behaviors
- Confirming plan operations match plan terms
Frequently Asked Questions
What are Roth catch-up contributions?
Catch-up contributions are additional elective deferrals allowed for participants age 50+. Under SECURE 2.0, certain high-wage employees must make those catch-up amounts as Roth (after-tax) contributions.
Who must make catch-up contributions as Roth in 2026?
Employees who are age 50+ and had 2025 Social Security (FICA) wages over $150,000 (Form W-2, Box 3) must designate catch-up contributions in 2026 as Roth.
What are the 2026 401(k)/403(b)/457(b) limits?
For 2026: elective deferrals are $24,500, catch-up is $8,000 (age 50+), and super catch-up is $11,250 (ages 60–63).
When do plan amendments need to be adopted?
Most plans must adopt amendments by December 31, 2026, with extended deadlines for collectively bargained plans (2028) and governmental/public-school 403(b) plans (2029).
Plan sponsors that start early tend to experience fewer payroll failures, fewer participant complaints, and smoother plan amendments. Trout CPA stays informed on the SECURE 2.0 Act’s mandatory provisions, and we are available to discuss considerations and questions as clients work with their plan service providers on implementation.
About the Author
Megan Senkowski, CPA
Megan joined Trout CPA in 2011 and has over 25 years of experience in public accounting. She graduated from Villanova University with a Bachelor of Science degree in Accounting with a minor in Finance. Megan is the chair of the firm's Non-Profit Industry Group and Employee Benefit Plans Practice Group. As an Assurance Partner, Megan handles all aspects of assurance engagements, business consulting, and financial statement preparation for some of the firm’s significant clients.
