In September 2025, the Treasury and the Internal Revenue Service (IRS) issued final regulations implementing key provisions from the SECURE 2.0 Act related to catch-up contributions in workplace retirement plans. These regulations clarify how employers must handle Roth catch-up contributions, increase contribution limits for certain age groups, and provide guidance for plan administrators on compliance. This newsletter breaks down what the final rules say, when they take effect, and what you (whether employer, employee, or plan administrator) need to do to prepare.
What is the Roth Catch-Up Requirement under SECURE 2.0?
Under the SECURE 2.0 Act, certain higher-income employees making catch-up contributions (additional retirement plan contributions allowed for participants age 50 and older) will now be required to designate those contributions as Roth contributions (i.e. after-tax). The final regulations define who is subject to this requirement and how it must be implemented.
Key Changes from Proposed to Final Regulations
Several modifications were made to the original proposed regulations in response to public comments. Notable changes include:
- Aggregating Wages from Separate Employers: Plan administrators will now be allowed to aggregate wages from certain separate common law employers when determining whether an employee exceeds the income threshold triggering the Roth catch-up requirement.
- Correction of Compliance Failures: There is updated guidance on how to correct failures to comply with the Roth catch-up requirement.
- Deemed Roth Elections: Rules around “deemed Roth elections” have been refined.
- Coverage for Participants in Puerto Rico: Special provisions or adjustments for plans covering participants in Puerto Rico are addressed.
Increased Catch-Up Contribution Limits & SIMPLE Plan Participants
In addition to the Roth designation requirement, SECURE 2.0 increases catch-up contribution limits for employees aged 60 to 63. Also, employees in newly established SIMPLE plans will see changes in how much extra they can contribute. Plan administrators will need to update their contribution rules accordingly.
Effective Dates & Transition Periods
- The Roth catch-up requirement will generally apply to contributions made in taxable years beginning after December 31, 2026.
- There are later applicability dates for certain governmental plans and those maintained under collective bargaining agreements.
- Meanwhile, plans may implement the requirement earlier (before 2027) using a “reasonable, good-faith interpretation” of the law.
- The administrative transition period established under Notice 2023-62 is not extended or modified, meaning it still generally ends December 31, 2025.
What Employers, Employees & Plan Administrators Should Do Now
To comply with the new rules effectively, stakeholders should:
- Review and update plan documents to account for the Roth catch-up requirement and the increased catch-up limits.
- Determine whether employees cross the income threshold using aggregated wages if applicable.
- Update communication/materials so that employees are aware that catch-up contributions may need to be after-tax under Roth rules.
- Train payroll and plan staff on processing Roth contributions, especially for catch-ups, including corrections in case of non-compliance.
- Monitor applicability dates, especially for governmental or collectively bargained plans, to ensure compliance begins at the correct time.
Conclusion
The final regulations issued by Treasury and the IRS under the SECURE 2.0 Act bring more clarity — and some new burden — to retirement plan administration, especially concerning catch-up contributions. The shift toward Roth catch-up contributions for higher-income individuals, coupled with increased limits for certain age groups, means that both employers and employees must be proactive to ensure smooth implementation. Planning ahead, updating necessary documents, and clear communication will be essential to avoid missteps when the rules come fully into force after 2026.
