Are You Ready for the SECURE 2.0 Roth Catch-Up Rule in 2026?

Key Takeaways

• Beginning January 1, 2026, employees age 50 or older who earned more than $150,000 in the prior year (amount published annually by the IRS) with their current employer must make their catch-up contributions as Roth.
• IRS final regulations apply starting in 2027, but plans must operate in good faith compliance beginning in 2026.
• The $150,000 test looks only at wages from the current employer; wages from other employers are not combined.
• The rule applies to 401(k), 403(b), and governmental 457(b) plans.
• If a plan does not currently offer Roth, affected high earners will not be able to make catch-up contributions once the rule applies.
• For 2026, the contribution limits are $24,500 plus a $8,000 catch-up, with a larger “super catch-up” of $11,250 available for ages 60 to 63 if the plan adopts it.
• Plan sponsors should be working in 2025 to add Roth features, update documents, coordinate payroll and recordkeeping, and test systems.
• SECURE/SECURE 2.0 Amendments are due by December 31, 2026. Be sure to discuss with your service providers to ensure these amendments reflect all related elections.

Introduction

When Congress passed the SECURE 2.0 Act in December 2022, the goal was to help Americans save more for retirement while modernizing how retirement plans operate. One provision in particular changes how people age 50 and older make extra, or “catch-up,” contributions to their 401(k). The SECURE 2.0 Act was originally scheduled to begin in 2024, but the IRS delayed enforcement through administrative relief, giving plan sponsors and employees more time to prepare.

Here’s where it stands now: The statutory rule takes effect January 1, 2026, meaning higher earners age 50 and older must make their catch-up contributions as Roth beginning that year. The IRS issued final regulations in September 2025, which are formally effective starting in 2027, but plans are expected to operate in “reasonable, good faith” compliance throughout 2026. This delay gives individuals and plan sponsors one more year to adjust strategies, add Roth features and test systems before the mandate becomes fully enforceable.

Plans must check an employee’s prior year wages to determine whether they exceed the $150,000 threshold. The rules also allow sponsors to automatically treat a pre-tax catch-up election as Roth if the employee is subject to the rule, avoiding errors and missed contributions.

Impact on individuals

Who is affected:

• Employees age 50 or older whose prior year wages with their current employer exceeded $150,000.

What to consider:

• Tax impact: Roth means you pay taxes now, but withdrawals later in retirement are tax-free. This can be valuable if you expect your tax rate to be higher in retirement.
• Plan design: If your employer’s plan does not include a Roth option, you will not be able to make catch-up contributions once the new rule begins.

What plan sponsors and administrators need to do now

1. Add Roth if you do not already offer it

Without Roth, high earners will be blocked from making catch-up contributions beginning in 2026. Work with your plan document provider, recordkeeper or ERISA counsel to add this feature and ensure it is properly reflected in your plan documents.

2. Confirm how to track the $150,000 threshold

Use prior year FICA wages from your payroll system to identify affected employees. Coordinate with your recordkeeper to automate this flagging process.

3. Set up default mapping for contributions

Configure your plan so that if a participant who must use Roth leaves a pre-tax election in place, their catch-up contribution automatically routes into the Roth account.

4. Update plan documents and communications

Adopt amendments, refresh summary plan descriptions and update enrollment materials to explain the Roth catch-up requirement.

5. Align payroll and reporting

Make sure payroll codes capture Roth contributions correctly and that W-2 reporting is accurate.

6. Decide whether to adopt the age 60–63 “super catch-up”

If you allow this higher limit, ensure systems can handle it and Roth mapping applies for high earners.

7. Be testing systems, communications and payroll feeds so you’re ready for 2026

While final regulations are effective in 2027, plans must comply in good faith starting in 2026, making 2025 a critical rehearsal year.

Note: This rule also applies to 403(b) and governmental 457(b) plans, so sponsors of those plans should prepare in the same way.

Final thoughts and looking ahead

Since its passage in December 2022, the SECURE 2.0 Act has reshaped the retirement plan landscape. The Roth catch-up requirement was originally scheduled for 2024, delayed through 2025, and now takes effect starting in 2026, with full regulatory compliance expected in 2027. This timeline gives individuals time to adjust their savings strategies and gives plan sponsors a critical year to put the right processes and systems in place.

Moore Colson audits approximately 70 employee benefit plans each year, including 401(k), 403(b), pension, cash balance, and ESOP plans. Our team works closely with plan sponsors, recordkeepers, custodians, and payroll providers to streamline implementation, reduce compliance risk, and ensure clear employee communications. With deep expertise in DOL expectations and retirement plan operations, we can guide sponsors through this important transition. Contact our Employee Benefit Plan team to review your plan document, payroll and recordkeeper setup, communications, and 2026 readiness.