Beginning January 1, 2026, the Secure 2.0 Act adds a new mandatory Roth requirement for catch-up contributions to employer-sponsored retirement plans that permit salary-deferral catch-up contributions. This includes 401(k), 403(b), and non-governmental 457(b) plans. Catch-up contributions are an option for allowing participants to contribute more than the typical annual limit in the years leading up to normal retirement age.
If an employer’s plan allows catch-up contributions, employees age 50 or older who earned more than $145,000 in Social Security wages in the prior year (referred to as “high earners”) must make any catch-up contributions on a Roth (after-tax) basis, and not as pretax contributions. The FICA wage threshold will be indexed annually. Payroll systems will need to be able to identify which employees are high earners and route their catch-up contributions to Roth. Employers should communicate with employees to explain why their catch-up contributions are now treated as Roth.
High earners can elect a regular deferred amount that remains pretax and then their catch-up contributions will be treated as Roth. For 401(k) and 403(b) plans, the IRS regulations provide an option allowing employers to use “deemed elections.” Deemed elections automatically treat the catch-up contributions as Roth once the high earner reaches the annual elective deferral limit. This provision in the IRS regulations, however, does not extend to 457(b) plans.
Please note that the requirement does not force employer-sponsored retirement plans to offer Roth contributions for regular deferrals. It only requires Roth treatment for catch-up contributions for employees who are high earners.