IRS Issues Final Roth Catch-Up Regulations

Starting in 2026, employees earning more than $145,000 in prior year FICA wages are required to make 401(k) and 403(b) catch-up contributions as Roth. This mandate requires extensive payroll coordination and planning in order to administer catch-up and Roth deferrals.

Did the IRS extend the deadline to implement this mandate?

No. On September 15th, the IRS made the final regulations effective as of January 1, 2027. For 2026, the new mandate is in effect, but under good faith efforts to meet the rule.

Which employees are subject to the mandatory Roth catch-up rule?

• Employees earning more than $145,000 in prior year FICA wages (W-2, Box 3) from their current employer.
• The $145,000 is measured as of 12/31/2025 for all plans and the new requirement begins on January 1, 2026 regardless of the plan year.
  • Not affected: Self-employed individuals without required FICA amount.

Is my plan required to offer catch-up as Roth if we don’t allow Roth deferrals?

No. However, if a plan does not have a Roth option, employees earning more than $145,000 in FICA wages will have a zero catch-up contribution limit and will be unable to make catch-up contributions beginning in 2026. To preserve this benefit for your employees, your plan will need to adopt a Roth feature.

Should I work with my payroll provider to modify our payroll process?

Yes. Work with your payroll provider to ensure that catch up contributions for impacted participants are reported as Roth after the employee reaches the 402(g) deferral contribution limit ($23,500 for 2025).

Failure to properly classify catch-up contributions as Roth is a plan error that will require corrective action. 

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