Preparing for Roth Catch-Up Contributions: What Employers Need to Know Before January 2026

As part of the Secure 2.0 legislation, significant changes are coming to age-based catch-up contributions for 403(b) retirement plans. These updates, issued by the IRS, will take effect on January 1, 2026, and require employers to take proactive steps to ensure compliance and support their employees.

Key Regulatory Changes

Beginning in 2026, employees whose FICA wages exceed $145,000 in 2025 must make their catch-up contributions on a Roth basis. This threshold will be indexed annually, meaning it may increase in future years. Importantly, FICA wages from multiple employers are not aggregated—each employer must assess eligibility independently.

Additionally, plan sponsors may treat an employee’s pre-tax catch-up election as a deemed Roth election, simplifying administration; however, there are notable exemptions, such as ministers whose wages are subject to SECA rather than FICA.

Employer Responsibilities

1. To remain compliant and support affected employees, employers must:
2. Communicate the changes to employees who may be impacted.
3. Coordinate with payroll vendors to implement Roth catch-up processing.
4. Ensure payment backup sent to their retirement provider, such as Pension Fund, accurately reflects Roth catch-up contributions.
5. Monitor total contribution limits, especially if your organization has more than one retirement plan provider.

Why This Matters

These changes are not just regulatory—they reflect a broader shift toward financial transparency and post-tax retirement savings. For employers, this is an opportunity to reinforce their commitment to employee financial wellness and ensure their retirement plans remain competitive and compliant.

Need Help?

If there are any questions about these regulatory changes, please contact your Client Relations team member, who can coordinate follow-up with our Compliance Officer, Dawn Fleming.

This article is current as of October 2025 and is intended for informational purposes only. The guidance provided is based on the IRS regulations issued under the Secure 2.0 legislation. Future updates to federal laws, IRS regulations, or plan documents may impact the information presented here. Employers are encouraged to consult with legal or tax advisors and monitor official IRS communications for the most up-to-date requirements.