🚨 What’s Changing?

Under the SECURE 2.0 Act, Congress introduced a new requirement for catch-up contributions (the extra amount participants age 50+ can save beyond normal IRS limits):

If an employee earned more than $145,000 in wages in the prior year, any catch-up contributions must be made on a Roth (after-tax) basis.

✅ The rule applies to 401(k), 403(b), and governmental 457(b) plans
✅ The wage threshold is indexed to inflation
✅ Effective for plan years beginning after Jan 1, 2026

That means: If your plan doesn’t already allow Roth contributions, you must add that feature—or your highly compensated employees could lose the ability to make catch-up contributions entirely.

🧠 Why This Matters for Employers

This change isn’t just about taxes. It impacts:

• Plan design – Does your plan allow Roth? If not, it will need to.
• Payroll coordination – How will your payroll system identify who earns above $145k and redirect contributions as Roth?
• Participant communication – Employees need to understand that they might be required to use Roth, and what that means for their take-home pay and retirement strategy.
• Vendor readiness – Is your recordkeeper, TPA, and payroll provider aligned on how this rule is implemented?

🗓️ Key SECURE 2.0 Catch-Up Dates

Roth catch-up required for wages > $145,000 – January 1, 2026 (Applies to age 50+ catch-up only)

Higher “super catch-up” for ages 60–63 – January 1, 2025 (Optional plan provision — up to $11,250 for 2025)

✅ Action Checklist for Employers

Before this rule goes live, here’s what you can do now:

• Confirm whether your plan allows Roth contributions
• Ask your payroll provider if they can support mandatory Roth catch-up
• Review plan documents and plan amendments with your advisor/TPA
• Communicate upcoming changes to impacted employees
• Consider whether to adopt the optional “super catch-up” for ages 60–63

📣 Our Take

These changes are an opportunity—not just a compliance requirement. Roth features offer employees tax-free retirement income and can help boost participation, especially among high earners. If you’re advising on or sponsoring a retirement plan, now is the time to get ahead.

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