global Tax IRS & Treasury Issue Final Regulations on Roth Catch-Up Contributions Under SECURE 2.0 October 09, 2025 Taxpayers take note: the IRS and Treasury have issued final regulations, requiring certain higher-income workers’ 401(k) catch-up contributions to be Roth starting in 2027, along with guidance on new limits and plan administration. The IRS and Treasury have finalized guidance addressing several key SECURE 2.0 Act provisions concerning catch up contributions. Here’s how you can prepare. Quick Takeaways Beginning in 2027, higher-income workers (earning $145,000 or more) must make 401(k) catch-up contributions as Roth (after-tax) rather than pre-tax.Withdrawals of Roth catch-up contributions in retirement will be tax-free.A new “super catch-up” applies for ages 60–63, allowing up to $11,250 in 2025.Employers will need to adjust payroll and recordkeeping systems, with some flexibility and correction options.Implementation is mandatory by 2027, but plans can adopt earlier under good-faith compliance. What is SECURE 2.0 Act?The Securing a Strong Retirement Act, H.R. 2954, otherwise known as the SECURE Act 2.0 provides changes to numerous retirement plan provisions, including IRAs, RMDs, 529 plans, catch-up contributions and more.What are the current rules for catch up contributions?Currently, employees age 50 or older can make additional “catch-up” contributions to their 401(k) or similar workplace retirement plan beyond the standard annual contribution limit. These contributions can be either pre-tax or Roth, depending on the plan and participant election.What are the final regulations?The final regulations clarify several provisions under SECURE 2.0, including:Mandatory Roth Catch-Up for High Earners: Employees age 50+ who earned $145,000 or more in the previous year will be required to make catch-up contributions Roth-only (after-tax). Regular contributions remain pre-tax.Tax Treatment: While catch-up contributions are made with after-tax dollars, withdrawals in retirement are tax-free.Super Catch-Up for Ages 60–63: Higher limits allow contributions above the standard catch-up amounts (up to $11,250 in 2025).Employer Guidance & Flexibility:Wages from related employers can be combined to determine if the threshold is met.Errors (i.e. pre-tax catch-up contributions made instead of Roth) can be corrected by the end of the following plan year.Plans may implement the Roth requirement earlier than 2027 using a reasonable, good-faith interpretation of the rules.When are the changes effective?The Roth catch-up requirement will generally apply to taxable years beginning after December 31, 2026. However, some governmental and collectively bargained plans have a later applicability date. Employers may choose to implement the rules earlier, provided they follow a reasonable, good-faith interpretation of the law, but there is a grace period before mandatory implementation. “While the final regulations give employers some breathing room until 2027, it’s critical to start planning now. Payroll systems, recordkeeping, and employee communications will all need updating to ensure compliance.” - Paul Nadeau What should taxpayers do now to prepare for the changes?Employees should review whether their income may subject them to the new Roth-only rule for catch-up contributions beginning in 2027.All employees age 50+ can continue catch-up contributions, but should plan for potential Roth allocation.Employers and Plan Administrators should begin preparing systems and communication strategies for the transition, particularly payroll and recordkeeping adjustments.Everyone should consult with their tax advisor or benefits professional to understand how these changes may impact their retirement savings strategy.FAQ- Final Catch up Contribution RulesCan I still make pre-tax catch-up contributions after 2026 if I earn over $145,000? No. Starting in 2027, higher-income workers must make catch-up contributions on a Roth (after-tax) basis.Does this rule apply to all contributions? No. Only catch-up contributions for age 50+ are affected. Regular elective deferrals can remain pre-tax.What if my employer isn’t ready by 2027? Employers have until the end of the following plan year to correct errors, but they must make a good-faith effort to comply.How do I know if I qualify for the new “super catch-up”? If you are between ages 60–63, you can contribute above the standard catch-up amount, up to $11,250 in 2025.Should I update my retirement savings strategy now? Yes. Reviewing your income, contribution elections, and long-term tax planning with an advisor will help you prepare for these changes.
