Final Roth Catch-Up Contribution Rules: What Employers Need to Know

Final Rules Issued on Catch-Up Contributions Under SECURE 2.0

On September 15, 2025, the IRS and U.S. Department of the Treasury issued final regulations under the SECURE 2.0 Act that will impact how catch-up contributions are handled for certain retirement plan participants. These updates, outlined in IRS Notice IR-2025-91, carry important implications for employers and plan sponsors preparing for upcoming compliance deadlines.

Key Update: Roth Catch-Up Contributions Required for High Earners

Starting in 2027, catch-up contributions for employees earning more than $145,000 in prior-year wages from the same employer must be treated as Roth (after-tax) contributions.

Employers must prepare now to update plan documents, coordinate with third-party administrators, and educate impacted employees.

Implementation Guidance from Final Regulations

The final rules provide clarity and some flexibility for employers navigating these changes.

Highlights include:

• Income Aggregation: Employers may aggregate wages from certain common law employers to determine if an employee is subject to the Roth catch-up requirement.
• Correction Procedures: The final rule outlines acceptable approaches to correct administrative errors related to Roth designations.
• Deemed Elections: Rules for deemed Roth elections are included to support seamless administration.

When Do the Rules Apply?

The Roth catch-up requirement applies to taxable years beginning after December 31, 2026. However:

• Employers may adopt the rules earlier if applying a reasonable, good faith interpretation of the law.
• Governmental and collectively bargained plans may qualify for a delayed applicability date.
• The final regulations do not extend the administrative transition relief granted in Notice 2023-62, which expires on December 31, 2025.

Action Items for Employers

Plan sponsors should take proactive steps to ensure timely compliance:

• Coordinate with your plan advisor and recordkeeper to confirm your plan’s readiness to administer Roth catch-up contributions by 2027.
• Evaluate payroll and HRIS systems to determine how they will capture and track the $145,000 income threshold.
• Communicate upcoming changes to eligible employees to avoid confusion and support informed retirement planning decisions.
• Consider plan amendments needed to reflect the new requirements and timelines.

Keiter is focused on keeping you updated on new and changing regulations that may impact your business and retirement plans. Questions on this topic? Contact your Keiter Opportunity Advisor | Call: 804.747.0000