Mandatory Roth Catch-Up Contributions Under SECURE 2.0: What Plan Administrators Need to Know in 2026

Retirement plan administrators have had SECURE 2.0 on their radar for years, and one of its most significant provisions is now here. Beginning in 2026, many employer-sponsored retirement plans must comply with the mandatory Roth catch-up contribution rule for certain higher-income employees.

While the change affects participants who are age 50 and older, the responsibility for implementation falls squarely on plan sponsors, payroll providers, and plan administrators. Proper preparation is essential to avoid operational errors and ensure your retirement plan remains compliant.

What Is the Mandatory Roth Catch-Up Rule?

Under Section 603 of the SECURE 2.0 Act, employees who are eligible to make catch-up contributions and earned more than $150,000 in FICA wages (indexed for inflation) from the same employer during the previous calendar year must make any catch-up contributions on a Roth (after-tax) basis beginning in 2026. For 2026, the IRS inflation-adjusted wage threshold is $150,000.

Employees whose prior-year wages are at or below the threshold may continue making catch-up contributions on either a pre-tax or Roth basis, depending on the plan’s provisions.

Who Is Affected?

The rule applies only if an employee:

• Is eligible to make catch-up contributions (generally age 50 or older)
• Participates in a plan that permits catch-up contributions
• Earned more than $150,000 in prior-year FICA wages from the same employer

The determination is based on W-2 wages from the employer sponsoring the plan—not total household income or income from other employers.

Which Retirement Plans Are Impacted?

The mandatory Roth catch-up requirement generally applies to:

• 401(k) plans
• 403(b) plans
• Governmental 457(b) plans

Plans that do not permit catch-up contributions are unaffected.

What Plan Administrators Should Do Now

1. Confirm Your Plan Offers Roth Contributions

If your plan allows catch-up contributions and includes employees who may exceed the wage threshold, it should include a Roth contribution feature. Without one, affected participants generally cannot make catch-up contributions.

2. Coordinate With Payroll

Payroll systems must be able to:

• Track prior-year FICA wages
• Identify participants subject to the rule
• Automatically direct eligible catch-up contributions to the Roth source
• Continue processing regular pre-tax elective deferrals until the annual deferral limit is reached

This often requires coordination between payroll software, recordkeepers, and third-party administrators.

3. Review Plan Documents

Plan documents and administrative procedures may need updating to reflect:

• Roth catch-up contribution provisions
• Operational procedures
• Participant election language

Work with your ERISA attorney or plan document provider to determine whether amendments are necessary.

4. Educate Employees

Many participants may be surprised that their catch-up contributions will no longer reduce their taxable income.

Communicating the change early can help employees understand:

• Why contributions are changing
• The tax implications
• How Roth contributions differ from pre-tax contributions
• Whether contribution elections need updating

Clear communication can significantly reduce confusion during open enrollment and throughout the year.

Don’t Forget the Enhanced Catch-Up Limits

SECURE 2.0 also increased catch-up contribution limits for participants ages 60 through 63.

For 2026:

• Standard catch-up contribution limit: $8,000
• Ages 60–63 enhanced catch-up limit: $11,250

The mandatory Roth rule applies to these higher catch-up contributions as well if the employee exceeds the prior-year wage threshold.

Common Questions From Plan Sponsors

Does this change affect regular 401(k) contributions?

No. Only catch-up contributions are affected. Employees may continue making regular elective deferrals on a pre-tax basis if permitted under the plan.

What if an employee changes employers?

The wage threshold is based only on wages paid by the current employer during the previous calendar year. A newly hired employee with no prior-year wages from your organization generally is not subject to the mandatory Roth catch-up rule for that first year.

Are all employees over age 50 required to use Roth catch-up contributions?

No. Only employees whose prior-year wages from the employer exceeded the applicable IRS threshold must make catch-up contributions on a Roth basis.

Final Thoughts

Although the mandatory Roth catch-up rule affects a relatively narrow group of participants, it introduces new administrative responsibilities for plan sponsors. Payroll coordination, plan document reviews, participant communications, and operational testing all play an important role in a smooth implementation.

Reviewing your retirement plan now can help avoid compliance issues later and ensure your organization is prepared for the new requirements under SECURE 2.0.

Need guidance on SECURE 2.0 compliance or retirement plan administration? The employee benefit professionals at MRPR can help you understand regulatory changes, evaluate your plan’s readiness, and work with your advisors to support ongoing compliance.

Authors: 

Greg Zink, CPA, Principal, MRPR

Matt Cash, CFP®, Avantax Planning Partners