Financial Planning
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For more than two decades, employer-sponsored retirement plans have allowed workers age 50 and older to make catch-up contributions, enabling them to save beyond the standard annual deferral limits.¹ The SECURE 2.0 Act of 2022 expanded this opportunity by introducing new “super catch-ups” for participants aged 60 through 63. Beginning in 2025, the standard employee contribution limit for 401(k), 403(b), and 457(b) plans will be $23,500. Participants aged 50–59 or 64 and older may add $7,500 in catch-up contributions, while those aged 60–63 can contribute up to $11,250 extra.¹ However, SECURE 2.0 also introduced a significant shift: starting in 2026, high-earning employees will be required to make these catch-up contributions on a Roth (after-tax) basis rather than pre-tax.²
Understanding the Change
Most workplace retirement plans let participants decide between pre-tax and Roth after-tax contributions. Pre-tax deferrals reduce taxable income in the current year, whereas Roth contributions are made with after-tax dollars but can grow and be withdrawn tax-free in retirement, provided the account is held for at least five years and withdrawals occur after age 59½.³ Lawmakers structured this Roth mandate partly to offset tax-revenue losses caused by pre-tax deferrals. Originally slated for 2024, the rule’s enforcement was postponed until 2026 to allow time for employers, payroll systems, and plan documents to be updated.⁴
IRS Final Regulations
In September 2025, the Internal Revenue Service (IRS) issued final regulations clarifying that the new Roth-catch-up requirement generally applies to taxable years beginning after December 31, 2026.⁵ The IRS further noted that plan sponsors may apply the rule earlier if they follow a “reasonable, good-faith interpretation” of the law.⁶ Many compliance experts interpret this to mean that employers are expected to have the necessary systems in place by 2026.⁷
Who Must Comply
To determine whether an employee exceeds the income threshold, employers will reference Box 3 (FICA wages) on the worker’s prior-year Form W-2. Employees with more than $145,000 in 2025 FICA wages will have all 2026 catch-up contributions treated as Roth.⁸ This rule does not apply to self-employed individuals or others without W-2 income.⁹ The new Roth requirement applies to both standard and super catch-ups in 401(k), 403(b), and 457(b) plans, but not to SIMPLE plans or the special catch-ups permitted in certain 403(b) and 457(b) plans. Plans that currently lack a Roth feature must either add one or disallow catch-ups for high earners.¹⁰ ¹¹
Planning Implications
Employees subject to the Roth catch-up mandate should review their tax and retirement-income strategies soon. While Roth contributions can produce tax-free retirement income, the loss of the pre-tax catch-up option could raise taxable income for some high earners beginning in 2026. Advisors may help affected clients adjust withholding strategies, evaluate Roth versus traditional contribution mixes, and coordinate future Roth conversion planning to maintain tax efficiency.
Mandatory Roth Catch-Up Contributions Begin in 2026
Understanding the Change
Most workplace retirement plans let participants decide between pre-tax and Roth after-tax contributions. Pre-tax deferrals reduce taxable income in the current year, whereas Roth contributions are made with after-tax dollars but can grow and be withdrawn tax-free in retirement, provided the account is held for at least five years and withdrawals occur after age 59½.³ Lawmakers structured this Roth mandate partly to offset tax-revenue losses caused by pre-tax deferrals. Originally slated for 2024, the rule’s enforcement was postponed until 2026 to allow time for employers, payroll systems, and plan documents to be updated.⁴IRS Final Regulations
In September 2025, the Internal Revenue Service (IRS) issued final regulations clarifying that the new Roth-catch-up requirement generally applies to taxable years beginning after December 31, 2026.⁵ The IRS further noted that plan sponsors may apply the rule earlier if they follow a “reasonable, good-faith interpretation” of the law.⁶ Many compliance experts interpret this to mean that employers are expected to have the necessary systems in place by 2026.⁷Who Must Comply
To determine whether an employee exceeds the income threshold, employers will reference Box 3 (FICA wages) on the worker’s prior-year Form W-2. Employees with more than $145,000 in 2025 FICA wages will have all 2026 catch-up contributions treated as Roth.⁸ This rule does not apply to self-employed individuals or others without W-2 income.⁹ The new Roth requirement applies to both standard and super catch-ups in 401(k), 403(b), and 457(b) plans, but not to SIMPLE plans or the special catch-ups permitted in certain 403(b) and 457(b) plans. Plans that currently lack a Roth feature must either add one or disallow catch-ups for high earners.¹⁰ ¹¹Planning Implications
Employees subject to the Roth catch-up mandate should review their tax and retirement-income strategies soon. While Roth contributions can produce tax-free retirement income, the loss of the pre-tax catch-up option could raise taxable income for some high earners beginning in 2026. Advisors may help affected clients adjust withholding strategies, evaluate Roth versus traditional contribution mixes, and coordinate future Roth conversion planning to maintain tax efficiency.Sources
- CNBC, “Catch-Up Contribution Rules,” January 4, 2017.
- PLANADVISER, “Roth Catch-Up Guidance Under SECURE 2.0,” October 1, 2025.
- IRS Publication 575: Pension and Annuity Income (2025 Edition).
- IRS Notice 2023-62.
- Internal Revenue Service, Final Regulations on Roth Catch-Ups, September 15, 2025.
- Society for Human Resource Management (SHRM), accessed October 2, 2025.
- Plan Sponsor Council of America, September 30, 2025.
- Plan Sponsor Council of America, September 30, 2025.
- Slott Report, September 22, 2025.
- Slott Report, September 22, 2025.
- ADP SPARK Blog, accessed October 2, 2025.
