Except in the case of multiemployer plans, the final rule does not extend the effective date of the Roth catch-up contribution requirement (i.e., certain participants can only make catch-up contributions as Roth contributions). Other types of plans must require a participant with FICA wages from their 2026 employer exceeding $145,000 in 2025 to make all catch-up contributions in 2026 as Roth contributions (as opposed to pre-tax contributions).

Until the final rule is effective, plans are required to comply with SECURE 2.0 using a reasonable, good-faith interpretation. Following the final rule is considered a reasonable, good-faith interpretation.

Background on the catch-up contribution changes

Since 2002, participants age 50 and older have been permitted to make “catch-up” contributions to DC plans. Starting with the 2025 calendar year, SECURE 2.0 provides a 50 percent increase in the amount of permitted catch-up contributions for each of the years in which a participant attains ages 60, 61, 62 and 63.

Additionally, SECURE 2.0 added a special limitation on catch-up contributions to both regular catch-up contributions and the ages 60–63 catch-up contributions. Participants with FICA wages from their employer that exceeded $145,000 for the prior year (Roth-limited participants) who want to make catch-up contributions must make the catch-up contributions as Roth contributions.

SECURE 2.0 made the Roth requirement for catch-up contributions effective for tax years beginning after December 31, 2023 (generally the 2024 calendar year). However, the Treasury Department in Notice 2023-62 delayed the effective date of the Roth rule to tax years beginning after December 31, 2025 (generally, the 2026 calendar year) by treating the Roth requirement as satisfied for 2024 and 2025, even if catch-up contributions were not made as Roth contributions.

On January 13, 2025, Treasury issued a proposed rule delaying the effective date of the regulatory guidance (but not the statutory provision) until the first calendar year beginning at least six months after Treasury issues a final rule. See our January 23, 2025 insight.

The final rule on catch-up contributions

On September 16, 2025, the Treasury Department issued the final rule, which closely follows the proposed rule.

These are the main changes:

• Definition of “employer” for FICA test
• Roth designation
• Current plan document
• Same rules for all participants
• Corrections
• Special 403(b) and 457(b) catch-up contributions
  
  

Definition of “employer” for FICA test

The definition of “employer” for the FICA wage test remains the immediate employer (i.e., the common law employer), but the final rule allows employers to choose to apply the wage test on a common paymaster or controlled group basis.

In the case of a multiemployer plan, the employer is each separate contributing employer, not the joint board of trustees.

Roth designation

A plan may have a provision that treats the catch-up contributions of all Roth-limited participants as Roth contributions. A plan that does not allow Roth contributions cannot allow catch-up contributions except if the plan limits catch-up contributions to participants that are not Roth-limited participants.

Some plans allow a payroll-by-payroll split between designating contributions as basic elective contributions or catch-up contributions. Because a participant cannot make catch-up contributions until the participant has made the maximum amount of basic catch-up elective contributions, catch-up contributions made early in the year and treated as Roth contributions, because the participant is a Roth-limited participant, may turn out not to be catch-up contributions at the end of the year. The final rule allows the plan to provide that the Roth treatment of the contribution must remain.

The final rule also allows a “deemed” catch-up election if contributions exceed one of the limits on basic contributions (e.g., the dollar limit). However, the plan must allow the participant to reject the deemed treatment.

Current plan document

Plans with current plan documents referring just to “catch-up contributions” should be amended to exclude age 60–63 catch-up contributions from the general term if the plan wishes not to allow age 60–63 catch-up contributions.

Same rules for all participants

The requirement that the plan have the same rules for all participants is not violated by allowing only pre-tax catch-up contributions (resulting in Roth-limited participants not being able to make catch-up contributions). Further, the rule is not violated by a plan limiting total deferrals to 75 percent of compensation or by having different catch-up contribution rules for collectively bargained participants and non-collectively bargained participants.

The final rule allows a plan that does not allow any elective contributions to be made as Roth contributions to pass the benefits, rights and features non-discrimination test even though that prevents non-highly compensated employees who are Roth-limited participants  from being able to make catch-up contributions. Such a plan may also preclude a highly compensated employee whose income is from self-employment (and thus has no FICA wages) from making catch-up contributions without violating the rule.

Corrections

The final rule continues to allow the two special correction methods of the proposed rule but adds some clarifications.

The Form W-2 correction method allows a pre-tax catch-up contribution that should have been a Roth contribution to be corrected by reporting it as a Roth contribution (with allocable gain or loss) on the Form W-2 for the calendar year. The in-plan rollover method allows the non-permitted pre-tax catch-up contribution to be corrected by doing an in-plan Roth rollover.

The plan does not have to use the same correction method for all participants with elective deferrals in excess of the same applicable limit. However, the plan must use the same method for all similarly situated participants. This new test is intended to address the fact that the need for correction is not always known at the time the W-2 method is available.

To use either of the special correction methods to correct elective contributions that exceed a statutory limit (such as the maximum amount of 401(k) contributions or the maximum contributions to a defined contribution plan), the plan must provide for the “deemed” election (with permissible participant override) discussed above.

The final rule extends the time the plan has to correct the Roth violation to the end of the taxable year following the taxable year of the mistake or the plan year following the plan year of the mistake depending on the nature of the mistake. However, correction for the purpose of the Roth requirement does not eliminate other consequences, such as the 10 percent excise tax if ADP failures are not corrected by their earlier deadline.

The final rule provides that no correction is needed if the amount of catch-up contributions that should have been Roth contributions does not exceed $250 (ignoring earnings and losses). It also provides that no correction is needed if the determination that the FICA wages were incorrect for the determination year (i.e., the year before) was not made until after the deadline for correction.

Special 403(b) and 457(b) catch-up contributions

For a 403(b) plan, the age 60–63 catch-up contributions are in addition to the existing special 15-year section 403(b) catch-up contributions. The special section 403(b) catch-up contribution, which also applies before the age 50 catch-up contribution, is not subject to the Roth restriction.

The additional age 60–63 catch-up contributions are also available for governmental 457(b) plans. Note that the additional catch-up contributions to a governmental 457(b) plan during the last three years prior to retirement age are not subject to the Roth restriction and only contributions in excess of that limit must be Roth contributions for Roth-limited participants.

Applicability and amendment date

The final regulations are generally effective for taxable years beginning after December 31, 2026. Plans (other than multiemployer plans) must satisfy the Roth contribution requirement for catch-up contributions for 2026 even though they need not follow the final rule until 2027. As noted above, a reasonable, good-faith interpretation applies with respect to the Roth requirement. The final regulation is a good-faith interpretation.

A collectively bargained plan has a delayed applicability date for the final regulation’s requirements. The delayed date is the first taxable year beginning after the date on which the last collective bargaining agreement in effect on December 31, 2025 terminates (determined without any extensions).

If the collectively bargained plan is a multiemployer plan, the requirement to make catch-up contributions as Roth contributions is deemed satisfied until the first date on which the last collective bargaining agreement related to the plan that is in effect on November 17, 2025 terminates (determined without regard to any extension). This in effect delays the statutory Roth requirement for multiemployer plans.

In the case of a governmental plan, the final rule does not apply until the first taxable year beginning after December 31, 2026, or, if later, the first taxable year beginning after the close of the first regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2025.

The final rule did not change the date that plans must be amended to have anti-cutback relief for the amendment’s retroactivity. It continues to be the date as specified in IRS Notice 2024-2. Consequently, the general amendment date remains December 31, 2026. Collectively bargained plans have two more years to make amendments: until December 31, 2028. Governmental plans have an additional year: December 31, 2029. Amendments must be in accord with how the plan was administered during the retroactive period.