The Roth catch-up contribution requirements will take effect in 2026 for most plans. Get details on implementation, including key updates to final regulations, who is impacted, and five important considerations for plan sponsors to prepare for this change.
The Internal Revenue Service and Treasury Department’s recent release of final regulations regarding the SECURE 2.0 Act Roth catch-up contribution requirement provides certainty that most plans must comply beginning in 2026.
The final regulations provide the additional guidance many were waiting for, though some aspects remain intricate and nuanced. With limited time to prepare, these changes will require planning and coordination across multiple aspects of retirement plan administration.
The statutory requirement is that most plans must comply starting with taxable years beginning after December 31, 2025, with the following exceptions:
- Collectively bargained plans are given until the first taxable year beginning after the date on which the last collective bargaining agreement (CBA) that is in effect on December 31, 2025, terminates. Any extensions to these agreements are not considered.
For example: If a CBA is in effect on December 31, 2025, and terminates on June 30, 2026, the new rules would begin in the first tax year starting after June 30, 2026.
- Multiemployer 414(f) plans have a similar rule, but uses November 17, 2025, as the reference date. The rule takes effect the first taxable year beginning after the last CBA in effect on November 17, 2025, terminates. Again, extensions are not considered.
- Governmental plans are given until the first tax year that begins after their legislative body has had a full session to make any necessary changes to the plan (starting after December 31, 2025).
Most plans can rely on a reasonable, good faith interpretation of the Roth catch-up rules until the end of the 2026 tax year.
- Participants age 50 or older earning more than $145,000 (indexed)
- The regulation does not apply to those who don’t have FICA wages (e.g. sole proprietors).
- The final regulation also dropped the requirement for participants subject to Puerto Rico tax code who are in plans qualified under both the U.S. and Puerto Rico tax codes, unless or until Roth contributions are permitted under the Puerto Rico tax code.
Final rules allow, but don’t require, aggregation of wages among an employer’s affiliates, or where a common paymaster is used, in determining whether someone meets the wage threshold.
If a plan doesn’t offer Roth contributions, there’s no requirement to add a Roth feature. However, high income earners, as defined above, won’t be allowed to make catch-up contributions.
Plans can adopt a “deemed Roth election” approach that will automatically treat catch-up contributions as Roth for affected employees—if they’re given a chance to opt out.
Some retirement plans let participants choose—during each payroll period—to treat part of their contributions as catch-up contributions, even if they haven’t yet hit the annual contribution limit. The plan may automatically treat those catch-up contributions as Roth contributions, even if it turns out those contributions didn’t actually qualify as catch-up contributions.
Mistakes can be fixed using W-2 corrections, in-plan Roth rollovers, or both. However, to use the special correction methods, the plan must have implemented a deemed Roth election methodology. The deadline for corrections is the end of the year following the year for which the catch-up contribution was made. If a plan does not include a “deemed Roth election” provision, pre-tax catch-up contributions made for a high-income earner must be distributed from the plan.
Starting in 2025, employees age 60 to 63 can contribute more than the standard catch-up limit—this is known as the “super catch-up.” However, beginning in 2026, any catch-up contributions (regular or super) made by high income earners (those with over $145,000 in FICA wages from the prior year) must be Roth contributions.
To accommodate catch-up contributions from high-income earner employees, the plan will need to offer Roth contributions with the start of the 2026 tax year. If the plan doesn’t currently include a Roth option, now might be the time to consider adding this feature to help ensure uninterrupted retirement savings for participants.
The number of participants choosing to use Roth has surged 80% since 2020.
Implementing a deemed Roth election can help streamline plan operations and provide access to IRS-approved correction methods. This proactive approach can help minimize administrative complexity while maintaining compliance with the new requirements.
Work with your payroll provider and recordkeeper to help ensure systems can properly identify affected participants using prior-year FICA wages that are Social Security wages reported in Box 3 of Form W2 and accurately process Roth catch-up contributions. Early preparation helps prevent processing delays and reduces the risk of administrative errors.
Clear, timely communication is essential for a smooth transition. Create a strategic approach to update plan documents, revise enrollment materials, and develop targeted communications that help participants understand how these changes affect their retirement savings strategy.
Take a proactive approach to compliance by determining your preferred correction method. Whether through W-2 adjustments, in-plan rollovers, or a combination of both. Become familiar with the $250 de minimis exception as it provides relief by allowing small errors under $250 to remain uncorrected, helping to reduce administrative burden for minor discrepancies.
Become familiar with key exceptions that help to reduce administrative burdens related to corrections including failures attributable to: Amended prior year Form W-2, and amended W-2 was not prepared until after the correction deadline.
The complexity of implementing these Roth catch-up contribution requirements demands careful planning and preparation. By taking proactive steps now to assess plan design, update systems, and develop clear communications strategies, it can help position employers and employees for success under these new requirements. Your retirement plan provider can be a valuable resource in navigating these changes effectively.
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