Need to Know: New Catch-Up Retirement Rules Finalized
- Robin Weingast
- 20 hours ago
- 3 min read
The IRS has finalized long-awaited regulations clarifying how “catch-up” contributions will work under the SECURE 2.0 Act, and what both plan sponsors and employees must do to stay on track by 2026.
If you sponsor a 401(k), 403(b), or similar retirement plan, or if you are age 50 or older, you’ve likely been waiting for guidance on the SECURE 2.0 Act provision that changes how employees age 50 and older make catch-up contributions. The IRS has now issued final regulations, offering important clarity — and a two-year window — for employers and payroll providers to prepare.
Background: The SECURE 2.0 Catch-Up Requirement
Under SECURE 2.0, all catch-up contributions made by employees earning more than $145,000 in FICA wages in the prior calendar year must be made on a Roth (after-tax) basis.
Originally set to take effect in 2024, the requirement caused confusion across the retirement plan community — from sponsors to recordkeepers — about payroll coordination and plan documentation. The IRS responded with a two-year administrative transition period, moving the effective date to January 1, 2026.
Key Provisions in the Final Retirement Catch-Up Regulations
The September 2025 IRS guidance, confirms several important details:
Mandatory Roth catch-ups for high earners.Starting in 2026, participants with wages over $145,000 (indexed for inflation) must make catch-up contributions on a Roth basis. Others may continue pre-tax or Roth contributions.
Catch-up contributions remain available.Early interpretations suggesting catch-ups might disappear were incorrect. The IRS confirms all eligible participants can still make them.
Extended plan amendment deadline.Employers have until December 31, 2026 to formally amend plan documents.
Self-employed clarification.The $145,000 threshold applies only to wages subject to FICA; self-employed income does not trigger the Roth rule.
Aggregation across plans.When an employer sponsors multiple retirement plans, wages are combined to determine whether an employee crosses the threshold.
Action Steps for Plan Sponsors
Now is the time for plan sponsors to use the transition period wisely:
Coordinate with payroll providers to ensure systems can identify employees over the $145,000 threshold.
Work with your recordkeeper to confirm readiness to process Roth catch-ups by 2026.
Communicate proactively with affected employees well before year-end 2025.
Plan your amendment timeline — don’t wait until the deadline.
Review plan design holistically in light of other SECURE 2.0 changes, including automatic enrollment and part-time eligibility expansions.
Action Steps for Employees
If you’re 50 or older and make catch-up contributions, these changes affect how your future savings are taxed. Here’s what to do:
Check your income level.If you earn more than $145,000 (FICA wages) in 2025, your 2026 catch-ups will need to be Roth.
Understand the difference between pre-tax and Roth.Roth contributions are made after taxes, but qualified withdrawals in retirement are tax-free. This may change your overall tax strategy.
Review your paycheck and deferral settings.Once your employer updates payroll systems, verify that your contribution elections reflect your intent.
Consult your financial or tax advisor.A shift to Roth may impact take-home pay and long-term retirement tax planning.
Stay informed.Expect communications from your plan sponsor during 2025 as implementation nears.
Looking Ahead
The IRS’s final word gives both employers and employees the clarity they’ve been waiting for, and time to prepare thoughtfully. Early coordination among payroll, HR, and participants will make the transition smooth when the new rules take effect in 2026.
The Robin S. Weingast & Associates team will continue to monitor regulatory updates and provide actionable insights to help keep your plan compliant and effective.
Need guidance implementing SECURE 2.0 updates? Contact your RSW TPA representative today to ensure your plan is ready for 2026.
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