On September 15, 2025, the Department of the Treasury and the Internal Revenue Service issued their final regulations addressing several SECURE 2.0 Act provisions related to catch-up contributions - additional contributions under a 401(k) or similar workplace retirement plan for employees who are age 50 or older. Prior to the passage of SECURE 2.0, employees age 50 and older were generally eligible (plan permitting), to make catch-up contributions - up to $7,500 in 2025 - to 401(k), 403(b), or governmental 457(b) plans. These contributions could take the form of either pretax or designated Roth elective deferrals (or both), depending on plan design and employee election.
Section 603 of SECURE 2.0 eliminates the option for certain employees to select either pretax or Roth treatment for catch-up contributions. Beginning January 1, 2026, employees whose prior-year Federal Insurance Contributions Act (FICA) wages exceed the Roth catch-up wage threshold of $145,000 in 2025 (indexed annually) must make all catch-up contributions on a Roth basis. This applies to 401(k), 403(b), and governmental 457(b) plans only - not to SEPs or SIMPLEs. Although the statutory effective date is for taxable years beginning on or after January 1, 2024, the IRS granted a two-year administrative transition period. During the 2024 and 2025 taxable years, plans can accept pretax catch-up contributions from affected participants without violating the new requirement.
Section 109 of SECURE 2.0 amended the Internal Revenue Code to increase the catch-up dollar limit (i.e., generally $7,500 for most catch-up individuals) for eligible participants who turn age 60-63 during the tax year. For these eligible employees participating in a 401(k), 403(b) and governmental 457(b) plan, the increased catch-up limit is 150% of the applicable catch-up limit, or $11,250 for 2025. The new Roth catch-up rule also applies to these so-called “super” catch-up contributions.
The Roth catch-up wage threshold is based on Social Security wages reported in Box 3 of Form W-2 from the employer sponsoring the plan. To determine whether an employee is subject to mandatory Roth catch-up contributions, FICA wages from the prior taxable year are used. In an employee’s first year of employment, however, wages are not adjusted or prorated. Such employees may not be subject to the designated Roth requirement until the next taxable year, depending on actual earnings in the year hired. Starting in 2025, the threshold will be indexed for inflation in $5,000 increments. The first adjustment is expected to apply to wages earned in 2026, which will determine Roth catch-up requirements for contributions made in 2027.
Additionally, the final regulations state that plans that allow catch-up contributions will not be required to include a Roth deferral provision to retain the catch-up contribution provision. If a plan does not offer a Roth deferral option, employees who are required to make catch-up contributions on a Roth basis cannot make catch-up contributions at all because their catch-up limit will be $0. The universal availability rule does not require employers to offer a Roth deferral provision or to eliminate catch-up contributions altogether.