The Roth Catch-Up Mandate Is Here — Is Your Plan Ready?

Stargret Thompson | Retirement Plan Consultant | Insights for plan sponsors & HR professionals

Starting January 1, 2026, high earners aged 50+ face new rules on how they can make catch-up contributions to their 401(k).

If your organization sponsors a 401(k) plan and has employees who earn over $150,000 a year, this change affects you directly. The SECURE 2.0 Act introduced a provision — commonly called the Roth catch-up mandate — that takes effect on January 1, 2026. Here’s what you need to know.

$150K Prior-year wage threshold that triggers the Roth catch-up mandate

What exactly is changing?

Under the new rules, any participant who is age 50 or older in 2026 and earned more than $150,000 in the prior year (i.e., 2025) is classified as a Highly Paid Individual — or HPI. These participants are no longer permitted to make catch-up contributions on a pre-tax basis. Instead, every dollar of their catch-up contribution must be directed into a Roth 401(k) account.

To be clear: HPIs can still defer pre-tax up to the regular annual limit. The change only applies to the catch-up portion — the extra amount available to those age 50 and above. That piece must now be funded as a Roth deferral.

Who is impacted?

Three-part test — all three must be true:

  • The participant is age 50 or older in 2026 (i.e., they attain age 50 during the plan year)
  • The participant earned more than $150,000 in wages during 2025
  • The participant is making or intending to make catch-up contributions to the plan

The good news for plan sponsors: you already have the data you need. Your 2025 employee census will tell you exactly who crossed the $150,000 threshold. Cross-reference that against employees turning 50 in 2026, and you have a clear list of affected participants to address before the new year.

What if your plan doesn’t offer a Roth option?

If your plan does not currently allow Roth 401(k) deferrals, HPIs will be unable to make any catch-up contributions at all. They lose access to that additional savings opportunity entirely — which could create frustration and potential liability. The solution is a plan amendment to add a Roth deferral feature before January 1, 2026.

Adding a Roth 401(k) option to your plan is not complicated, but it does require a formal plan amendment and updates to your recordkeeping and payroll systems. The time to act is now — before year-end deadlines make it a scramble.

Action steps for plan sponsors

Your 2025–2026 pre-compliance checklist:

  • Pull your 2025 census and identify employees earning over $150,000
  • Flag anyone turning 50 in 2026 from that group — these are your HPIs
  • Confirm whether your plan document currently allows Roth 401(k) deferrals
  • If Roth is not available, work with your plan consultant to amend the document before January 1, 2026
  • Notify affected participants about the change and update enrollment materials accordingly
  • Coordinate with your payroll provider to ensure catch-up contributions for HPIs are coded as Roth

The Roth catch-up mandate is one of the most operationally significant SECURE 2.0 changes for mid-to-large employers. Proactive plan sponsors who prepare their plan documents, census data, and participant communications now will avoid the last-minute scramble — and protect their highest-earning participants’ retirement savings options.

Questions about whether your plan is ready for the Roth catch-up mandate? Reach out to a retirement plan consultant to review your options before the deadline.