The IRS has finalized key regulations under the SECURE 2.0 Act that will reshape how 401(k) catch-up contributions work, especially for high earners. These changes go into effect on January 1, 2026, and plan sponsors need to start preparing now.
At Navia, we’re here to help you stay ahead of compliance and keep your retirement plans running smoothly. Here’s a breakdown of what’s changing and what you should do next.
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Roth Catch-Up Contributions Required for High Earners
Starting January 1, 2026, employees earning $145,000 or more in FICA wages (indexed annually) must make their catch-up contributions on a Roth basis.
What this means for clients:
- If your plan doesn’t offer Roth contributions, catch-up contributions will be disallowed for these employees.
- You’ll need to track FICA wages (not total comp) to determine who qualifies.
- Plans must offer Roth catch-up contributions to all participants, not just high earners.
- If a participant doesn’t elect Roth, their catch-up contributions will be automatically treated as Roth unless they opt out.
Navia Tip: If your plan doesn’t currently support Roth, now’s the time to add it. We can help you evaluate options and implement changes. Read our previous blog, Secure 2.0 and Roth Catch-Up Rules: Preparing for 2026.
New “Super Catch-Up” for Ages 60–63
Beginning in 2025, participants aged 60–63 can contribute up to $11,250 (or 150% of the regular catch-up limit), indexed for inflation.
Still unclear: Whether offering this enhanced catch-up is mandatory for plans that already allow catch-up contributions.
Navia Tip: We’ll keep you updated as guidance evolves. For now, make sure your systems can handle age-based contribution limits.
IRS Correction Methods for Catch-Up Errors
If a plan mistakenly allows pre-tax catch-up contributions for high earners, the IRS provides two correction options:
- Corrected W-2
- In-plan Roth rollover
These corrections must be made promptly, and only if your plan has procedures in place to prevent the error.
Navia Tip: We recommend reviewing your payroll and plan procedures now to avoid costly corrections later.
Key Deadlines to Know
Depending on the type of error, correction deadlines vary:
- Elective deferral limit exceeded: April 15 of the following year
- Annual employer-provided limit exceeded: 2½ months after plan year-end (or 6 months for auto-enrollment plans)
- ADP testing failure: Same deadlines apply
Next Steps for Employers
Here’s how to get ahead of the 2026 deadline:
- Review your plan’s Roth feature, add it if needed.
- Coordinate with payroll to track FICA wages accurately.
- Update employee communications to explain the new rules.
- Ensure systems can handle automatic Roth designation for high earners.
Need help navigating these changes?
Navia’s retirement experts are ready to support you with plan design, compliance, and employee education. Let’s make sure your plan is ready for 2026 and beyond.
📄 Read the IRS Final Regulations
FAQs
Q1: Who is affected by the new Roth catch-up contribution rule?
A: Employees who earned $145,000 or more in FICA wages in the prior calendar year must make their 401(k) catch-up contributions on a Roth basis starting in 2026. If your plan doesn’t offer Roth contributions, these employees won’t be able to make catch-up contributions at all.
Q2: What happens if our plan doesn’t currently offer Roth contributions?
A: You’ll need to add a Roth feature to your plan before 2026 to remain compliant. Without it, high earners will be ineligible to make catch-up contributions. Navia can help you evaluate and implement Roth options tailored to your workforce.
Q3: How do we determine which employees are “high earners”?
A: The IRS defines high earners for this rule as those who earned $145,000 or more in FICA wages (not total compensation) in the previous calendar year. Payroll teams will need to track this data accurately to ensure compliance.
Q4: What is the new “super catch-up” contribution for ages 60–63?
A: Starting in 2025 and onward, participants aged 60 to 63 can contribute up to $11,250 (or 150% of the standard catch-up limit), indexed for inflation. It’s still unclear whether this provision is mandatory for plans that already allow catch-up contributions.
Q5: What if we mistakenly allow pre-tax catch-up contributions for high earners?
A: The IRS provides two correction methods:
- Issue a corrected W-2
- Process an in-plan Roth rollover
These corrections must be made promptly and only if your plan has procedures in place to prevent such errors. Navia recommends reviewing your systems now to avoid future compliance issues.