IRS Confirms Effective Date of Mandatory Roth Catch-Up Rule
In final regulations issued on September 15, 2025, the IRS confirmed that company retirement plans must comply with the SECURE 2.0 Act’s mandatory Roth catch-up rule as of January 1, 2026.
That rule requires high-paid employees who wish to make catch-up contributions to have them made as Roth contributions. A high-paid employee is someone who earned more than $145,000, as indexed, in W-2 wages from his current employer in the prior year. The IRS regulations confirm that the rule doesn’t apply to individuals (like the self-employed) who don’t have prior year W-2 “wages,” but instead have earned income.
The Roth catch-up rule is the first mandatory Roth provision ever added to the tax code
It applies to employees in 401(k), 403(b) and governmental 457(b) plans. It does not apply to non-governmental 457(b) plans (which do not even allow Roth contributions) or to SIMPLE IRA plans (which do allow them). The Roth mandate applies to both “regular” catch-up contributions for employees who turn age 50 or over (for 2025, up to $7,500) and the new “super catch-up” for employees who turn ages 60, 61, 62 or 63 during the year (for 2025, up to $11,250).
The rule was originally effective for plan fiscal years starting on or after January 1, 2024. (The fiscal year for most plans is January 1 – December 31.) However, in response to a flood of complaints by plan recordkeepers, the IRS delayed the effective date two years. In the final rules, the IRS opted not to extend the rule any longer. So, plans must implement the new rule effective for fiscal years beginning in 2026 (January 1, 2026 for most plans).
The IRS did extend the effective date of its final regulations interpreting the new law until January 1, 2027. The IRS’s decision to delay the effective date of its regulations has led some to conclude that plans don’t have to comply with the law itself until 2027. That is incorrect. Plans do have to comply with the Roth catch-up law starting in 2026. It’s just that during 2026, plans have more leeway in how they apply the law and don’t necessarily have to follow the IRS’s guidance.
Final Rules Make Changes
The final rules make some technical administrative changes to the proposed rules that were sought by 401(k) administrators. But, on the big-ticket items, the IRS stuck to its guns. For example, it kept the rule that plans that don’t offer Roth 401(k) contributions cannot allow high-paid employees to make any catch-ups – pre-tax or Roth. Also, the IRS shot down the suggestion that plans should be able to make Roth catch-ups mandatory for all employees as a way of easing administration of the new rule.
By Ian Berger, JD
IRA Analyst
Ed Slott and Company, LLC
Interested in reading more of our library of articles on topics like this and more? Click here to browse our selection of financial articles.
If these administration changes have you questioning your financial plan, click here to schedule a complimentary 20-minute Q&A with a licensed financial advisor who can help you start on the right path.
Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007.