What Employers Need to Know About the 2026 Roth Catch-Up Rule

If you sponsor a 401(k) or 403(b) retirement plan for your employees, a key provision of the SECURE 2.0 Act will soon require your attention. Beginning January 1, 2026, the Roth Catch-Up Rule goes into effect—impacting how catch-up contributions are handled for high-income earners. Here's what you need to know to stay compliant and support your employees. 

What Is the Roth Catch-Up Rule? 

The rule mandates that employees who earned more than $145,000 in W-2 wages from your company in the prior year must make any catch-up contributions as Roth contributions. This applies to both standard catch-up and super catch-up contributions. 

🔍 Note: This rule does not apply to business owners or individuals with earned income that isn’t classified as W-2 wages. 

Can You Require All Catch-Up Contributions to Be Roth? 

No. The IRS has rejected the idea of requiring all catch-up contributions to be Roth. Only those meeting the income threshold must comply. 

Are There Income Limits for Roth Contributions? 

Not within a 401(k). While Roth IRAs have income limits, Roth contributions to a 401(k) are not subject to income restrictions. 

What Should Employers Do? 

Here’s a step-by-step guide to help you operationalize the rule: 

1. Identify Affected Employees

Review your payroll records to determine which employees earned more than $145,000 in W-2 wages last year and are age-eligible for catch-up contributions. 

2. Coordinate with Your Payroll Provider

Ensure your payroll system can automatically update the tax treatment of catch-up contributions for affected employees. Not all providers have this functionality yet, so proactive communication is key. 

3. Consider a “Deemed Election” Approach

Some employers are implementing a deemed Roth election for affected employees. This treats them as having elected Roth for catch-up contributions by default. While this method complies with IRS rules, it lacks formal documentation and may carry risk. Employees must still be given the opportunity to opt out or choose a different election. 

4. Monitor Implementation

Because this is a new regulation, errors are likely. Regularly audit your plan’s operations and coordinate with your recordkeeper to ensure compliance. 

Final Thoughts 

The Roth Catch-Up Rule represents a significant shift in retirement plan administration. Employers must take steps now to prepare for 2026 and ensure their plans remain compliant. At Plancorp, we’re here to help you navigate these changes and communicate them effectively to your employees. If you’d like to discuss ways to reduce fees, increase engagement, and drive more value from your retirement plan, let’s chat.