SECURE 2.0 §603: Required Roth Catch-Up Contributions (Effective 2026)
Effective January 1, 2026, qualified retirement plans that permit catch-up contributions must require certain individuals to make those catch-up amounts as Roth (after-tax) contributions. This change applies when a participant’s prior-year FICA wages are at least $145,000 (indexed after 2026).
Who is a “highly paid” individual for this rule? A participant with $145,000 or more in prior-year FICA wages. For this determination, Schedule C and K-1 compensation do not count (e.g., self-employed individuals with only Schedule C income are not subject to this rule).
If your plan allows catch-up but not Roth contributions
- Beginning in 2026, catch-up deferrals must be limited to non-highly paid individuals (those under the FICA threshold).
- Catch-up-eligible participants with prior-year FICA wages of $145,000 or less may continue making pre-tax catch-up contributions.
- Participants at or above the threshold cannot make catch-up contributions until the plan is amended to add Roth deferrals.
Action for payroll: Stop deferrals for affected participants once they reach the standard elective deferral limit for the year if Roth is not available.
If your plan allows both catch-up and Roth contributions
- For individuals with $145,000+ in 2025 FICA wages, all 2026 catch-up contributions must be designated as Roth (after-tax).
Important opt-out note
Participants who do not want to make Roth catch-up may need to reduce their deferral rate so year-to-date deferrals remain at or below the standard elective deferral limit (i.e., no catch-up).
Special rule for 403(b) plans (15-year service catch-up)
Some 403(b) participants with at least 15 years of service may be eligible for an additional catch-up amount. Under §603, if a participant may contribute, for example, $5,000 in special 15-year catch-up and the regular age-50 catch-up is $7,500 that year, then at least $2,500 of the catch-up must be contributed as Roth. The remainder can be pre-tax or Roth.
Next steps for plan sponsors
- Identify affected participants: age 50+ with $145,000+ in 2025 FICA wages.
- Coordinate with payroll by 12/31/2025 to ensure affected participants are set up for Roth catch-up contributions in 2026.
- Confirm system changes/testing with your payroll provider to properly code, withhold, and report Roth catch-up amounts.
- Communicate to impacted employees about the change and any needed updates to their deferral elections.
Compliance reminder: Failure to implement these rules in 2026 can create adverse tax consequences for the plan and certain highly paid employees.