The SECURE 2.0 Act continues to impact the retirement landscape, and one of its most impactful provisions — the Roth catch-up contribution requirement for higher earners — is effective in 2026. With final regulations issued in mid-September, plan sponsors now have clarity on how to prepare for implementation.
Background: Understanding catch-up contributions and Roth
Catch-up contributions allow participants aged 50 and older to contribute additional amounts to their retirement plans beyond the standard IRS limits. These contributions help older workers boost their retirement savings as they approach retirement age.
A Roth contribution is made with after-tax dollars, meaning the participant pays taxes upfront, but qualified withdrawals are tax-free. Catch-up contributions could traditionally be made on a pre-tax or Roth basis.
Under the SECURE 2.0 Act, participants earning more than $145,000 in FICA wages in the prior year must make any catch-up contributions in the form of Roth starting in 2026. Initially slated for 2024, the rule was delayed, giving plan sponsors time to adjust.
Main takeaways from the final regulations
2026 is a good-faith year
While the Roth catch-up requirement officially begins in 2026, the IRS has clarified that 2026 will be treated as a good-faith compliance year. Sponsors are expected to make reasonable efforts to comply, even if full implementation isn't perfect yet.
FICA wage requirement
The Roth catch-up mandate applies to participants with FICA wages more than $145,000 (indexed for inflation) in the prior year. These wages are reported in Box 3 of Form W-2, and the rule applies separately to each employer. Plans may optionally aggregate wages across controlled groups and/or affiliated employers using a common paymaster, but this is not required and must be stated as such in the plan document.
Deemed Roth catch-up election
Plans may implement a deemed Roth election, meaning participants subject to the Roth requirement are automatically treated as having elected Roth catch-up contributions at the time of their deferral election. However, participants must still have an effective opportunity to make a different election. This deemed election simplifies administration, but it must be communicated clearly to participants to avoid confusion.
Reminder: Correction procedures
Mistakes will happen, especially in the early stages of implementation. The IRS provides two correction methods for Roth catch-up designation errors:
W-2 correction method: Transfer the contribution to the Roth account and report it as Roth on the W-2.
In-plan Roth rollover method: Roll the contribution into the Roth account and report it on Form 1099-R.
Additionally, the Self-Correction Program (SCP) allows sponsors to fix certain errors without IRS involvement, provided the plan has adequate internal controls. Corrections need not be made if the missed Roth deferral is less than $250, or if the $145,000 FICA threshold is not surpassed until wage adjustments are made after the correction deadline.
Call to action for plan sponsors
With 2026 approaching, sponsors should take proactive steps:
Payroll coding: Ensure payroll systems can identify participants subject to the Roth catch-up requirement and properly code contributions.
Participation communication: Educate employees — especially those near or above the wage threshold — about the changes and their options.
Final thoughts
The Roth catch-up rule under the SECURE 2.0 Act is a significant shift, but with the final regulations in hand and a good-faith compliance year ahead, sponsors have a clear path forward. Sponsors can ensure a smooth transition and continued plan integrity by updating systems, educating participants and preparing for potential corrections.
If you have any questions, contact our team to speak with one of our retirement plan consultants. To learn more, check out our SECURE 2.0 Discussion Series, using session one and session two. Please note that we are not attorneys and as such, we do not and cannot provide legal advice on this topic.