The IRS released final regulations in September clarifying the SECURE 2.0 Act’s catch-up contribution requirements for workplace retirement plans, including new Roth contribution mandates for high earners, increased limits for certain age groups, and administrative transition relief. (TD 10033; 9/5/2025)
Background
The SECURE 2.0 Act, enacted in 2022, amended the Tax Code to require that employees aged 50 or older with prior-year FICA wages exceeding $145,000 (indexed for inflation) make catch-up contributions as after-tax Roth contributions for taxable years beginning after December 31, 2023. The law also increased the catch-up contribution limit for participants ages 60 through 63 to 150% of the standard limit, effective for taxable years beginning after December 31, 2024.
For SIMPLE plans, the catch-up limit rose to 110% of the regular limit for certain eligible employers beginning after December 31, 2023, and then to 150% for SIMPLE participants in the 60-63 age group beginning after December 31, 2024.
If any participant is subject to the Roth catch-up requirement, all catch-up eligible participants must be allowed to make Roth catch-up contributions. SECURE 2.0 provided a two-year administrative transition period for 2024 and 2025, during which plans will not be penalized for noncompliance with the Roth catch-up requirement, allowing time for system updates and compliance adjustments.
Proposed Regulations
The Treasury Department and IRS issued proposed regulations in January 2025 to clarify the SECURE 2.0 Act’s catch-up rules. The proposal specified that Roth catch-up eligibility would be determined based solely on wages from a participant’s common law employer, without aggregation across multiple employers. The proposed regulations outlined two correction methods for catch-up errors: a Form W-2 correction and an in-plan Roth rollover. Additional guidance addressed dual-qualified plans covering Puerto Rico participants.
These rules were set to apply for contributions in tax years beginning more than six months after final regulations are issued, with separate applicability dates for collectively bargained plans.
Comments and Final Regulations
During the comment period, stakeholders requested flexibility to aggregate wages from certain separate common law employers when determining Roth catch-up eligibility. Commenters also supported allowing a participant’s election to make pre-tax catch-up contributions to be treated as a Roth election if the participant is subject to the Roth requirement, provided the participant could opt out.
Additional comments sought expanded correction methods for pre-tax catch-up contributions that should have been Roth, such as allowing recharacterization rather than requiring distributions. Stakeholders also requested clearer guidance for plans covering Puerto Rico participants.
The final regulations, released in September 2025, allow aggregation of wages from certain separate common law employers for Roth catch-up eligibility. Plans may treat a participant’s pre-tax catch-up election as a Roth election if the participant is subject to the Roth requirement, as long as an opt-out is available.
Correction methods now include both a Form W-2 correction and an in-plan Roth rollover. The IRS included specific provisions for dual-qualified plans covering Puerto Rico participants. But it did not adopt suggestions to require all catch-up contributions to be Roth, citing statutory language that requires Roth contributions to be an employee election.
Effective Date
The final regulations generally apply to contributions for taxable years beginning after December 31, 2026, with later applicability for certain governmental and collectively bargained plans. Notice 2023-62‘s administrative transition period remains in effect through December 31, 2025.
For more on the mandatory Roth treatment of catch-up contributions for high-wage earners under the SECURE 2.0 Act, see Checkpoint’s Federal Tax Coordinator 2d ¶ H-9249.2.
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