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401(k)ology – Final SECURE 2.0 Catch-Up Regulations: Highlights to Know

By Joni L. Jennings, CPC, CPFA®, NQPC™ | Published December 16, 2025

The Final Catch-up Regulations largely confirmed what we were expecting, by clarifying Highly Paid Individual (HPI) determinations, employer aggregation, and correction mechanics. However, there were some twists thrown in that plan sponsors should be aware of as 2026 approaches. The language was confusing, but this post will break it down in simple terms with simple dates.

In June of this year, we posted Mandatory Roth Treatment of Catch-up Contributions for High Earners, which was based on the Proposed Catch-up Regulations. Then on September 16, 2025, Treasury and IRS issued the Final Regulations regarding catch-up contributions, including both Super Catch-up (ages 60-63) and Mandatory Roth Catch-up (age 50+) contributions.

This post will keep it short and sweet with a quick refresher on catch-up contributions and a summary of what is new and when you have to comply.

Quick Refresher

• Age 60–63 “super catch‑up” begins in 2025. The super catch-up limit for 2025 is $11,250 and remains unchanged at $11,250 for 2026.

• Mandatory Roth treatment for high earners begins January 1, 2026. When the 2026 401(k) Dollar Limits were released in November 2025, the lookback year compensation for determining HPIs was set at $150,000 rather than $145,000. $145,000 was the applicable limit included in SECURE 2.0 enacted in 2022. The IRS confirmed that the limit is indexed for inflation for the employee to be classified as an HPI subject to the mandatory Roth catch-ups for the 2026 calendar year, and that the $150,000 threshold is based on what is reported on the employer’s prior-year (2025) Form W-2 (Box 3).

• Mandatory plan amendments for the age 60-63 super catch-up must be adopted by December 31, 2026 (retroactive to 2025). The super catch-up ages cannot be modified, but employers do have the option to either allow super catch-up contributions or not.

What’s New in the Final Regulations

• Who is a “high earner” (HPI) and who is the employer – HPI status is determined using the prior-year Form W‑2 Box 3 Social Security FICA wages (not Box 5 Medicare wages), with a transitional allowance to use Box 5 until the Final Regulations formally apply in 2027. Determinations are made per common law employer (including in MEPs). Optional aggregation is available for controlled groups and affiliated service groups (Related Employers) using common paymasters. Special rules apply when a successor employer (in an asset transaction) issues a single Form W‑2 for the year.

• Universal availability and plans without Roth – If a plan lacks a Roth feature, HPIs effectively have a catch‑up limit of $0. This does not violate 403(b) plan universal availability rules or nondiscrimination.

• Self-employed individuals – The Treasury Department notes potential disparities for some self‑employed HCEs and indicates it is permissible (not mandatory) to limit catch‑ups for HCEs who would be HPIs if their earnings were FICA wages (e.g., partners in a partnership who are paid on Form K-1 rather than on Form W2).

• Deemed Roth election – Deemed Roth treatment is permitted if included in the plan document and if participants have an effective opportunity to opt out (annual notices are a practical way to demonstrate this). The deemed election applies after the participant reaches the §401(a)(30) elective deferral limit (not the §415(c) annual additions limit). If a participant drops below the HPI threshold in a later year, the deemed Roth treatment must cease within a reasonable period. Sponsors that require affirmative Roth catch-up elections (instead of a deemed approach) will need plan amendments to terminate prior catch‑up elections and re‑establish them as designated Roth contributions.

• Corrections methods and deadlines – Employers may apply different correction methods to “similarly situated participants” (e.g., those identified before vs. after Form W‑2 issuance) but not based on investment results. Two methods are confirmed:

  • Form W‑2 method (before W‑2 filing for the calendar year, the deadline for which is January 31st of the subsequent year): move the contribution (plus earnings) to Roth and report the contribution as designated Roth on the W‑2 for the year of deferral.
  • In‑plan Roth rollover method: move the contribution (plus earnings) to Roth and report the taxable amount on a Form 1099‑R in the year of the rollover. This is available even if your plan otherwise doesn’t allow participants to elect in‑plan Roth rollovers.

Plan qualification is preserved if you fix administrative Roth classification failures by the end of the plan year following the year of the error (the “Correction Deadline”). However, Internal Revenue Code based tax consequences still apply if earlier deadlines are missed: - §402(g) Excess Deferrals: not corrected by April 15th → potential double taxation of the excess. - ADP/ACP Excess Contributions for HPIs who are also HCEs: not corrected by March 15th (June 30th for applicable EACAs) → 10% employer excise tax.

• De minimis safe harbor: amounts of $250 or less may remain pre‑tax with no correction.

  • Catch-ups in operation vs. Designated Catch-ups: Plans may, but don’t have to, count earlier in‑year Roth deferrals toward an HPI’s Roth catch‑up requirement. The treatment of this may depend on whether the plan is using the “deemed” catch-up election versus a separate catch-up election.

• 5 Year Roth Clock – The five‑taxable‑year “Roth clock” starts with the first amount includible in income as a designated Roth contribution (including amounts moved via either correction method if that is the first Roth), and early distributions may face 10% recapture during this period.

• Special Rules for 403(b), 457(b), and Puerto Rico plans –

  • 403(b): the special 15 years of service catch-up can remain pre-tax; only the age 50+ catch-up portion for HPIs must be Roth.
  • Governmental 457(b): the special 457(b) catch-up can remain pre-tax; age 50+ catch-ups beyond that are subject to the Roth mandate for HPIs.
  • Puerto Rico: the Roth catch-up requirement is waived until Puerto Rico law permits Roth contributions.

Examples of the “Deemed” Roth Catch-Up Election

• Example #1 – Pre-Tax Only Trigger
  • Plan has adopted deemed Roth catch‑up provision.
  • Plan uses the “pre‑tax deferrals only” 402(g) trigger (once pre‑tax reaches 402(g), all additional deferrals that year are Roth catch‑up).
  • 402(g) limit for the year: $24,500 (2026 limit).
  • Catch‑up limit for the year: $8,000 (2026 limit).
  • Employee: Alex, age 52, earned more than $150,000 in W2 Box 3 FICA wages in 2025 from his employer.
  • Alex has a 15% pre‑tax deferral election on file and no Roth election.

Each pay period, payroll withholds 15% as pre‑tax deferrals and sends it to the recordkeeper as regular pre‑tax deferrals. These amounts count toward the 402(g) limit of $24,500. At some point during the year (e.g., in October), Alex’s cumulative pre‑tax deferrals hit $24,500. At that point, the recordkeeper (based on the plan setup) will:

1. Stop accepting additional pre‑tax deferrals for the year, and
   2. Automatically treat any additional deferrals submitted as Roth catch‑up.

After the 402(g) limit is reached, Alex keeps the same 15% deferral on file; there is no need for Alex to make a separate Roth election. For the rest of the calendar year, payroll still withholds 15% from each paycheck but as Roth rather than pre-tax. This continues until Alex’s total catch‑up contributions reach $8,000 (the catch‑up limit).

The end result for the year is that Alex deferred pre‑tax regular deferrals totaling $24,500 and Roth catch‑up deferrals totaling $8,000.

Alex never submitted a Roth election, but all catch‑up was processed as Roth under the plan’s deemed Roth catch‑up setup, satisfying the SECURE 2.0 Roth catch‑up requirement.

• Example #2 – Deemed Roth catch‑up with “pre‑tax + Roth” trigger
  • Same facts as example #1 except plan uses the “pre‑tax + Roth” deferral trigger.
  • Once the combined total of pre‑tax plus Roth deferrals reaches $24,500 (2026 402(g) limit), any additional deferrals in 2026 are treated as Roth catch‑up.
  • Alex’s elections are 8% pre-tax deferrals and 7% Roth deferrals each pay period.

Each pay period, payroll withholds 8% as pre-tax deferrals and 7% as Roth deferrals. The recordkeeper tracks both toward the 402(g) limit of $24,500 (rather than only pre-tax). Partway through the year, Alex’s cumulative pre‑tax + Roth deferrals = $24,500. At that point, under the plan’s settings, the recordkeeper will treat any further deferrals for the year as Roth catch‑up contributions.

Alex keeps the same 8% pre-tax / 7% Roth elections on file but from this point forward, no additional amounts are processed as regular pre‑tax or regular Roth. Instead, the entire 15% deferral is processed as Roth catch‑up. This continues until Alex’s Roth catch‑up contributions reach $8,000.

In this scenario, Alex will defer more than required as Roth deferrals for the year. Recall that only $8,000 out of $32,500 ($24,500 + $8,000) for 2026 must be Roth. If Alex’s intent is to only defer $8,000 in Roth for 2026, all deferrals made before reaching the regular limit of $24,500 must be pre-tax deferrals.

Operational Guidance for Payroll, Recordkeepers, and Communications

• Payroll should determine HPI status using prior‑year (2025) W-2 Box 3 FICA wages, flag HPIs to the recordkeeper by the first payroll of the year and monitor pre‑tax and Roth deferrals up to the 402(g) limit ($24,500 in 2026), then flip catch‑ups to Roth under the plan’s deemed election (or cease deferrals at the limit if catch-ups require an affirmative election). The plan sponsor should explicitly direct any optional aggregation (controlled group or common paymaster).

• Recordkeepers generally act as a backstop via year‑end testing and correction processing (often using the 1099‑R in‑plan Roth rollover method), rather than monitoring mid-year “flip points.”

• Deemed election is widely recommended to streamline operations, provided participants have an effective opt‑out opportunity.

• Communications are key, so plan sponsors should update Summary Plan Descriptions and annual notices and send targeted messaging to employees near or above the HPI threshold.

Key Effective Dates

• 2025 Super Catch-ups: Age 60–63 super catch‑up may be permitted (optional provision as plans are not required to offer the super catch-up for ages 60-63); super catch-up amendment must be adopted by December 31, 2026 and be retroactive to 2025.

• 2026 Transition relief for Roth catch‑up administration continues through December 31, 2026.

• 2026 Roth mandate begins for HPIs; apply good‑faith compliance aligned to the Final Regulations through 2026, Final regulations become mandatory for 2027.

• 2027 Final Regulations apply to tax years beginning after December 31, 2026; W2 Box 3 FICA wages must be used for HPI determinations (the transitional Box 5 allowance ends).

Action Checklist for Plan Sponsors

• Decide whether to offer the age 60-63 super catch‑up in 2025 (hopefully already decided for 2025); amendment must be adopted by December 31, 2026.

• If the plan lacks a Roth feature, add designated Roth contributions before January 1, 2026 so HPIs can continue catch‑ups.

• Adopt a deemed Roth catch‑up election in the plan document, include a clear annual opt‑out, and specify that deemed Roth treatment starts once the 401(a)(30) limit is hit (regular deferral limit). Establish a “reasonable period” process to cease deemed treatment when someone is no longer an HPI.

• Direct payroll on any optional aggregation approach (controlled group/common paymaster) for HPI determinations and document the decision; if only some entities are aggregated, reflect that in plan documentation.

• Refresh written practices and procedures to preserve self‑correction. Note the April 15th (402(g)) and March 15th/June 30th (ADP/EACA) refund deadlines alongside the “end of following plan year” Correction Deadline for In-Plan Roth Rollovers and apply the $250 de minimis rule where appropriate.

• Coordinate correction workflows with providers: use the W‑2 (Box 3) method when feasible and the 1099‑R in‑plan Roth rollover method otherwise. Keep “similarly situated” participant groupings consistent and track first‑time Roth timing for the 5‑year clock.

• Communicate early and often with employees age 50 and over, especially those near the HPI threshold, about the 2026 Roth requirement, how deemed election works, and how in‑year Roth deferrals can satisfy Roth catch‑ups if needed.

Conclusion

The Final Regulations confirm the 2025 super catch‑up and 2026 Roth mandate, while providing practical clarity on HPI determinations, plan design (including deemed elections), correction methods and deadlines. With timely amendments, clear notices, and payroll/recordkeeper coordination, sponsors can meet the good‑faith standard in 2026 and be fully prepared for 2027.