SECURE Act 2.0: New Rules for Catch Up Contributions

Starting in 2026, the SECURE Act 2.0 introduced a significant change to how certain retirement plan catch‑up contributions must be made. Under the new law, employees who earn above a specified income threshold are required to make their catch‑up contributions on a Roth (after‑tax) basis rather than as traditional pre‑tax deferrals. Subject employer-sponsored plans include

401(k), 403(b), and 457(b) type plans.

Specifically, this rule applies to employees who earned more than the IRS‑indexed wage threshold in the prior calendar year, based on FICA wages from the employer sponsoring the plan. For eligible and affected employees, any catch‑up contributions made must be contributed as Roth dollars. The current threshold for 2026 contributions is $150,000 in FICA wages from 2025. Employees below the threshold may continue making catch‑up contributions on a pre‑tax basis, if the plan allows.

It’s important for employers to understand that this is not optional when applicable. If an employee meets the compensation threshold, the plan must treat their catch‑up contributions as Roth. As a result, employers need to ensure their retirement plan and payroll accounts are properly configured to support Roth catch‑up contributions and accurately identify impacted employees.

This requirement has operational and communication implications. Employers should review compensation data, confirm payroll readiness, and clearly explain the change to affected employees so they understand how Roth catch‑ups differ from pre‑tax contributions, including the impact on take‑home pay and future tax treatment.

If you believe you may have employees who could be affected by this change—or if you are unsure whether your plan is properly prepared—please contact ABC. Our team can help review your employee population, evaluate plan readiness, and guide you through the steps needed to remain compliant while supporting your employees’ retirement goals.