Roth Catch-Up Contributions - Are You Ready for January 1, 2026?

Starting January 1, 2026, a key provision of SECURE 2.0 will officially take effect: Roth Catch-Up Contributions will be mandatory for certain high-income earners aged 50 and older. This change, originally slated for 2024, was delayed giving plan sponsors, recordkeepers, and payroll providers time to prepare. Now, with the final regulations released by the IRS and Treasury Department, the countdown is real.

What's Changing?

Under the new rule, participants aged 50+ earning more than $145,000 in prior-year wages must make their catch-up contributions on a Roth (after-tax) basis. Traditional pre-tax catch-up contributions will no longer be allowed for this group.

This shift is designed to enhance retirement savings flexibility and tax diversification, but it also introduces operational complexity for plan sponsors.

What You Need To Do Now

With the effective date fast approaching, plan sponsors should take the following steps:

 

• Confirm with your recordkeeper that Roth catch-up functionality is enabled and tested.

• Coordinate with your payroll provider to ensure wage tracking and Roth designation are properly configured.

•  Review participant communications to ensure employees understand the change and its impact. 

• Consult resources like Fidelity's Roth Catch-Up Resource Center for implementation guidance.

Helpful Resources

• NAPA: What's the Actual Effective Date? - Clarifies the timeline and compliance expectations. 

• 401k Specialist: IRS Final Regulation Summary - Details on the finalized rules. 

• SPARK Guide for DC Plans - Practical implementation tips. 

Final Thoughts

January 2026 may feel distant, but the groundwork must be laid now. Don’t wait until year-end to discover gaps in your systems or communications. Confirm with your partners today and ensure your plan is ready to go.

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Adviser, Member FINRA/SIPC. Rose Street Advisors is independently owned and operated. #4843970