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SECURE 2.0: 2026 Roth Catch-Up Contribution Requirement

Overview of SECURE 2.0

SECURE 2.0 is a federal law designed to strengthen retirement savings across the United States by making workplace retirement plans more accessible, flexible, and easier to use. Passed in late 2022, the legislation builds on earlier retirement reforms by encouraging employee participation, modernizing plan rules, and expanding savings options for both employers and employees.

Rather than taking effect all at once, SECURE 2.0 introduces its changes gradually over several years. As a result, employers may see new requirements or optional plan features become available at different times, including important updates to catch-up contribution rules beginning in 2026.

What Is Changing in 2026?

Beginning in 2026, certain employees will be required to make catch-up contributions on a Roth (post-tax) basis rather than pre-tax.

Who Is Affected?

An employee is considered a High Income Earner and subject to the Roth catch-up requirement if both of the following apply:

  • The employee is catch-up eligible (age 50 or older, or turning 50 during the calendar year), and

  • Their prior-year W-2 Box 3 (FICA) wages exceed the Roth Catch-Up Wage Threshold, which is indexed annually

    • Example: $150,000 for 2025 wages (used to determine 2026 eligibility)

Employees who meet these criteria may not make pre-tax catch-up contributions after 2025. Any catch-up contributions must be made as Roth contributions if the plan allows Roth deferrals.

How Empeon Supports the Roth Catch-Up Requirement

Empeon provides the tools employers need to comply with SECURE 2.0 while maintaining flexibility for different plan designs.

Identifying High Income Earners

Empeon reports can be used to identify employees who may be subject to the Roth catch-up requirement by reviewing:

  • Employee age, and

  • Prior-year FICA wages (W-2 Box 3), which are recorded and available within Empeon

These reports allow employers to proactively determine which employees may need adjustments before catch-up contributions begin in 2026.

Stopping Pre-Tax Catch-Up Contributions

For affected employees, employers can manually stop pre-tax deferrals at the regular deferral limit.

  • A deduction limit can be added to stop pre-tax deductions once the regular deferral limit is reached

    • Example: $24,500 for 2026

  • This prevents any additional pre-tax contributions from being treated as catch-up

⚠ Important:
Empeon does not automatically stop pre-tax deferrals for High Income Earners. This is intentional, as plan rules, limits, and provider requirements vary.

Converting Contributions to Roth

If an employee is required (or chooses) to make Roth catch-up contributions:

  • Employers can manually add a Roth deduction for the employee

  • Roth deductions can be configured based on the plan’s design and the employee’s election

⚠ Automatic conversion from pre-tax to Roth is not provided.

This is because:

  • Not all plans offer Roth deferrals

  • Some plans do not use spillover functionality

  • Some plans have not adopted “deemed Roth catch-up” features under SECURE 2.0

  • Automation in this area could create compliance risks if applied incorrectly across different plan designs.

Optional: 401(k) Integration Support

For employers using Empeon’s 401(k) integration service, plan-level data sharing may help reduce manual steps and streamline ongoing contribution updates, depending on the retirement provider’s capabilities.

Deduction Code Requirements

Proper deduction setup is essential for supporting Roth catch-up contributions.

Pre-Tax vs. Roth Deferrals

  • If a plan allows Roth deferrals, a separate Roth deduction code is required

  • Pre-tax and Roth deferrals must always be tracked separately

Catch-Up Coding Based on Plan Design

Retirement plans typically follow one of two catch-up approaches. Empeon supports both.

1. Spillover Approach

  • Employee makes one deferral election

  • Once the regular deferral limit is reached ($24,500 in 2026), additional contributions automatically spill into catch-up (up to $8,000 in 2026)

  • No separate catch-up election is required

Required deduction codes:

  • One pre-tax deferral code

  • One Roth deferral code

2. Separate Election Approach

  • Employee makes two elections: regular and catch-up

  • Both deductions run simultaneously until limits are met

  • If the employee does not reach the full regular deferral limit, catch-up amounts must be reclassified as regular, making this approach less efficient

Required deduction codes:

  • Regular pre-tax

  • Catch-up pre-tax

  • Regular Roth

  • Catch-up Roth

Key Takeaways

  • SECURE 2.0 requires Roth-only catch-up contributions for High Income Earners beginning in 2026

  • Employers must proactively identify affected employees using age and prior-year wages

  • Empeon supports compliance through reporting, deduction limits, and flexible deduction setup

  • Automation is intentionally limited to avoid plan-specific compliance issues

  • Empeon supports both spillover and separate-election plan designs

Frequently Asked Questions (FAQ)

Does SECURE 2.0 require employers to offer Roth deferrals?

No. SECURE 2.0 does not require employers to add Roth deferrals to their retirement plans. However, if a plan does not allow Roth deferrals, High Income Earners will not be able to make catch-up contributions beginning in 2026.

How do we know which employees are considered High Income Earners?

High Income Earners are employees who:

  • Are age 50 or older (or turning 50 during the year), and

  • Exceeded the Roth catch-up wage threshold based on prior-year W-2 Box 3 (FICA) wages

Empeon reports can be used to identify employee age and prior-year FICA wages to help determine which employees may be affected.

Will Empeon automatically enforce Roth catch-up rules?

No. Empeon does not automatically:

  • Stop pre-tax catch-up contributions, or

  • Convert pre-tax deferrals to Roth

This is intentional due to differences in retirement plan design, provider rules, and Roth availability. Employers retain control to ensure deductions align with their specific plan requirements.

What happens if a High Income Earner continues making pre-tax catch-up contributions?

Beginning in 2026, pre-tax catch-up contributions made by High Income Earners are not permitted under SECURE 2.0. Employers should work with their retirement plan provider to correct any non-compliant contributions.

Do contribution limits change in 2026?

Yes. For 2026:

  • The regular employee deferral limit is $24,500

  • The catch-up contribution limit is $8,000

These limits are subject to IRS adjustments and should be confirmed annually.

What role does Empeon play versus the retirement provider?

Empeon supports payroll deduction setup, reporting, and optional integration. Retirement plan providers remain responsible for:

  • Determining plan eligibility and compliance

  • Monitoring contribution limits

  • Administering participant accounts

Employers should continue to consult their provider for plan-specific guidance.

Will using Empeon’s 401(k) integration automate Roth catch-up compliance?

Integration may help streamline data sharing depending on the provider, but it does not replace employer responsibility for configuring deductions correctly or ensuring Roth catch-up rules are followed.