SECURE 2.0 Catch-Up Contributions Part 2:
Mandatory Roth Catch-Up Contributions Coming in 2026
This post is Part 2 of our series covering the two major catch-up contribution changes under SECURE 2.0. In Part 1, we covered the new “super catch-up” for employees aged 60 through 63. Now we shift gears to focus on a change that affects high earners: starting in 2026, certain participants will be required to make their catch-up contributions as Roth (after-tax) contributions.
Beginning in 2026, employees earning over $145,000 will be required to make catch-up contributions as Roth-only. This means plan sponsors need to prepare their systems, documents, and communication strategy now.
What’s Changing?
Under Section 603 of SECURE 2.0, beginning in 2026:
- If an employee earned more than $145,000 in prior-year wages (as reported on the W-2 and subject to FICA), any catch-up contributions must be designated as Roth (after-tax).
- Lower earners can still choose either pre-tax or Roth catch-up contributions.
- The $145,000 threshold will be indexed for inflation starting in 2025. The indexed threshold for 2025 wages used to determine mandatory Roth contributions for the 2026 calendar year is expected to be announced in late 2025.
The IRS has issued guidance, including proposed regulations clarifying several nuances, including:
- Only employees with wages subject to FICA are subject to mandatory Roth requirements, i.e., partners or sole proprietors who only had self employment income are exempt.
- If an employee who is subject to mandatory Roth requirements has an election in place to make catch-up contributions on a pre-tax basis, the plan sponsor may deem it as an election to make catch-up contributions on a Roth basis.
- Plans that allow mandatory Roth catch-up contributions must also allow Roth catch-up contributions to all eligible employees.
- To determine FICA wages in the prior year, only the employee’s “common law” employer is included, i.e., wages from other employers are not required to be aggregated in this determination.
- Plans that do not offer Roth contributions will not be allowed to offer catch-up contributions.
What Plan Sponsors Should Do Now
- Confirm whether your plan offers Roth contributions. If not, work with your document provider to add the feature before 2026.
- Coordinate with payroll and record keepers to track prior-year wages and restrict pre-tax catch-ups for high earners on wages paid in 2026 and beyond
- Develop a communication plan for employees, especially those who may be impacted by the Roth requirement
What This Means for Employees
- High earners will need to make catch-up contributions using after-tax dollars,
- However, qualified Roth distributions in retirement will be tax-free.
- Some may want to adjust their deferral strategies now to align with this upcoming change.
Example Scenario
Let’s say Sarah earned $150,000* of FICA wages in 2025. In 2026, she’s 52 and wants to make a catch-up contribution. Her plan allows Roth, so she can contribute the catch-up amount, but it must be Roth. She will pay taxes on that contribution now, but her future withdrawals (if qualified) will be tax-free.
If her plan didn’t offer Roth? She’d be locked out of catch-up contributions entirely.
Avoid Surprises, Plan Ahead
While 2026 may feel far away, these changes require:
- Payroll system updates
- Plan document changes
- Participant education
Remember, starting early means fewer errors and a smoother rollout.
Final Thoughts
This isn’t just a tax tweak. It’s a plan design and operations issue that impacts real participants. If you have high earners in your plan—and most of us do—you can’t ignore this one.
If you’re not sure whether your systems and providers are prepared, or you want help communicating this to clients or employees, we’re here to help.
Let’s make sure your plan is ready for 2026—before it’s too late.
*Assuming the mandatory Roth catch-up limit is $145,000 for 2026.
