IRS Issues Final Regulations Related to Catch-Up Contributions to 401(k) and 403(b) Plans – Some Changes Effective January 1, 2026

On September 15, 2025, the Internal Revenue Service and the Department of the Treasury issued final regulations regarding provisions of the SECURE 2.0 Act of 2022, related to retirement plan “catch-up” contributions.

As part of the SECURE 2.0 Act, Congress added provisions to the Internal Revenue Code requiring that “catch-up” contributions made to 401(k) or 403(b) plans by employees with FICA wages above a certain threshold be treated as Roth contributions (i.e., they cannot be made with pretax dollars).

Due to concerns about the ability of employers and plan administrators to accommodate this requirement in a timely manner, the IRS deferred implementation of the requirement to 2026.

Beginning January 1, 2026, if an employee is aged 50 or older and makes the allowable “catch-up” salary deferrals (up to $7,500 in 2025*) into the plan or the special “super catch-up” salary deferrals available to employees aged 60 to 63 (up to an additional $3,750 in 2025*), and if such employee received FICA wages from his or her current employer of more than $145,000 (inflation-indexed*) in the previous calendar year, such catch-up contributions must be treated as Roth (after-tax) deferrals.

If a plan does not offer Roth deferrals, employees aged 50 and older who are subject to the mandatory Roth requirement may not make catch-up contributions to the plan.

The final regulations issued on September 15 provide guidance for plan administrators to implement and comply with the new Roth “catch-up” rules.

Employers should begin working with their plan administrator now to ensure compliance with these new rules effective January 1, 2026.

*These amounts are adjusted annually for inflation.  We expect the IRS to release the 2026 amounts in November 2025.