Beginning in 2026, certain high-earning retirement plan participants who make catch-up contributions will be required to make those contributions on a Roth basis. For plan sponsors, this is more than a technical update. It may require coordination across payroll, recordkeepers, plan documents, employee communications, and plan design before the rule is fully in effect.
The Roth catch-up contribution requirement was introduced under SECURE 2.0 and applies to participants whose prior-year FICA wages with the plan sponsor exceed the applicable wage threshold. For 2026, that threshold is $150,000. If a participant’s 2025 FICA wages exceeded $150,000 and the participant is eligible to make catch-up contributions in 2026, those catch-up contributions must be treated as Roth contributions.
Plans are required to implement the catch-up Roth contribution limit for high earners beginning with plan years after December 31, 2025.
What This Means for Plan Sponsors
Plan sponsors should review whether their current retirement plan structure can support the new requirement. Plans that already offer Roth contributions will need to confirm that payroll and recordkeeping systems can properly identify affected participants and direct applicable catch-up contributions to Roth.
Additionally, if your plan currently does not include Roth contributions, the participants at the catch-up contribution limit will be unable to make catch-up contributions. To prevent the affected participants from being able to contribute catch-up contributions, plan sponsors should consider adding Roth options to their current retirement plans. This proactive step will ensure compliance and provide flexibility for participants.
The operational impact can be significant. Employers may need to determine which wages are included, how the prior-year threshold will be applied, whether payroll data is being shared accurately with the recordkeeper, and how participants will be notified of the change. Addressing these items early can help reduce confusion and avoid last-minute implementation issues.
Questions for a Successful Implementation
- Does the plan currently allow Roth contributions?
- Can payroll identify participants whose prior-year FICA wages exceeded the applicable threshold?
- Has the recordkeeper confirmed how the Roth catch-up requirement will be administered?
- Do plan documents, participant notices, or employee communications need to be updated?
- Has leadership reviewed how this change may affect highly compensated employees who regularly make catch-up contributions?
Because implementation may involve plan design, payroll coordination, and participant communication, plan sponsors should begin reviewing their current retirement plan structure now.
Richey May can help evaluate readiness, identify potential gaps, and outline practical next steps before the requirement creates disruption for participants or plan administrators.
For more details, refer to the IRS update here.
