SECURE 2.0 – Mandatory Roth Catch-up Contributions

On September 16, 2025, the U.S. Department of the Treasury and Internal Revenue Service (IRS) issued final regulations addressing several SECURE 2.0 Act provisions relating to catch-up contributions (catch-up contributions are additional, tax-advantaged contributions allowed for individuals aged 50 and older to boost their retirement savings beyond standard annual limits). The regulations include final rules related to a SECURE 2.0 Act provision requiring that catch-up contributions made by certain higher-income participants be designated as after-tax Roth contributions. While this shift may seem minor, it impacts multiple aspects of retirement plans, such as payroll, plan documents, and compliance.

Key Mandate Details

From a timing perspective, the final regulations are effective January 1, 2027. However, for 2026, a reasonable, good faith interpretation standard applies regarding the administration and operation of the new requirement. Below are several key details of the mandate.

Types of Retirement Plans Impacted

• 401(k) or similar workplace retirement plans that permit participants who have attained age 50 and above to make catch-up contributions.
• Does not apply to SARSEP, SIMPLE IRA, Starter K, or Safe Harbor 403(b) plans.
• Does not apply to the special catch-up contribution rules applicable to 403(b) and 457(b) plans (e.g., for 403(b) plans, the catch-up is available to long-term employees with at least 15 years of service).

Employees Impacted

• Higher Wage Earners – Employees 50 years of age or older with FICA wages from the employer sponsoring the plan greater than $150,000 (indexed annually) in the preceding year. Note that there is no requirement to do a “lookback” for a new employee.

What Is the Mandate?

• Catch-up contributions for higher wage earners, as defined above, must be made as Roth contributions.

Does the Mandate Require a Plan to Permit Roth Contributions?

• No – however, in the case of a plan that does not permit Roth contributions, higher wage earners will not be permitted to make catch-up contributions. To prevent this, the plan would require an amendment to allow for Roth contributions.

Can a Plan Be Amended to Require All Catch-up Contributions to Be Made as Roth?

• No – employees that are not classified as higher wage earners must have the opportunity to make catch-up contributions on a pre-tax basis.

What If a Higher Compensated Participant Elects to Make Pre-Tax Deferrals and Catch-up Contributions?

• The catch-up portion does not start until the pre-tax deferral limit is met.
  • The IRS does not require an affected participant to elect to make their catch-up contributions as Roth. However, any contributions beyond the regular contribution limits must be classified as Roth by the plan sponsor.
  • If the catch-up contributions are contributed as pre-tax deferrals instead of Roth as required, and the error is found before the W-2 is issued, the excess pre-tax deferrals will be transferred to the Roth account. If the error is found after the W-2 is issued, the correction will be processed as an in-plan Roth conversion, and a 1099-R will be issued.

The above is just a high-level glimpse into the new mandate. The final regulations also address “super catch-up” contributions that may be offered to employees ages 60 through 63 beginning in 2025. This was an optional provision of the SECURE 2.0 Act that applies to all participants making catch-up contributions, not just higher wage earners.

It’s important that plan sponsors begin preparing now for operational and document compliance. This includes coordination with recordkeepers, payroll providers, and third-party administrators, as well as communications with employees. Proper planning will help prevent errors and corrections and will ensure an uncompromised participant experience.

Please contact us if you have questions about the information outlined above; our seasoned and experienced employee benefit plan professionals are here to help.  You can also learn more on our Employee Benefit Plan services page.

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