High Earners Get a Reprieve: Mandatory Roth Catch-Ups Pushed to 2026

What SECURE 2.0 required

Section 603 of the SECURE 2.0 Act, enacted as Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117-328, changed how catch-up contributions work for higher earners. It added IRC § 414(v)(7), which requires that catch-up contributions by a participant whose prior-year wages from the plan-sponsoring employer exceeded $145,000 — a figure indexed for inflation — be designated as Roth, after-tax contributions rather than pre-tax.

The threshold is measured by FICA wages from the employer in the preceding calendar year. The rule, as written, was scheduled to take effect for taxable years beginning after December 31, 2023 — that is, in 2024.

For a high earner accustomed to making pre-tax catch-up contributions of $7,500 for 2023, the change would have meant losing the up-front deduction on those contributions. For plan sponsors, it would have required Roth tracking that many systems were not built to handle.

The drafting error that alarmed the industry

There was a second, more immediate problem. In making its changes, § 603(b)(1) struck IRC § 402(g)(1)(C). Read literally, the deletion of that provision appeared to eliminate all catch-up contributions — Roth and pre-tax alike — starting in 2024.

That was plainly not what Congress intended, but the statutory text said what it said, and the uncertainty was real enough to disrupt plan administration. Notice 2023-62, issued August 25, 2023, addressed it directly. The IRS confirmed that the elimination of § 402(g)(1)(C) does not eliminate catch-up contributions, which remain permitted on both a pre-tax and a Roth basis. The technical glitch was acknowledged and neutralized.

The two-year delay

On the substantive rule, the IRS provided relief in the form of an administrative transition period.

Notice 2023-62 treats the first two taxable years beginning after December 31, 2023 as a transition period running through December 31, 2025. During that period, two things are true. Catch-up contributions by high earners are treated as satisfying the § 414(v)(7) requirement even if they are not designated as Roth — meaning pre-tax catch-ups by high earners may continue. And a plan that does not offer a Roth feature is treated as satisfying the requirement, meaning such a plan may continue to permit catch-up contributions.

The practical effect is a two-year deferral. The mandatory-Roth rule for high earners first applies in 2026. Pre-tax catch-up contributions can continue through 2025.

Why the delay happened

The relief responded to a straightforward operational reality. Recordkeepers, payroll providers, and plan sponsors reported that they could not reliably implement the change by 2024. Identifying which participants exceed the wage threshold, coordinating that determination with payroll, and routing catch-up contributions to Roth treatment require system changes that take time to build and test. The IRS acknowledged these implementation concerns and built in the runway to address them.

What this means in practice

The two-year transition period is a planning window, not a reason to stop planning. The mandatory-Roth requirement for high earners is still the law; only its effective date has moved. For 2024 and 2025, plan sponsors can continue to allow pre-tax catch-up contributions for all eligible participants, including high earners, and plans without a Roth feature can continue to offer catch-ups. But sponsors should use the interval to build the capabilities the rule will require in 2026: a reliable way to identify participants over the wage threshold, payroll coordination to route their catch-ups to Roth, and — for plans that lack one — a Roth contribution feature. The defensible approach treats 2026 as the real deadline and 2024–2025 as the time to be ready for it.

Key takeaways

• SECURE 2.0 § 603 requires catch-up contributions by participants whose prior-year wages from the employer exceeded $145,000 (indexed) to be made on a Roth basis, under IRC § 414(v)(7).
• The requirement was scheduled for 2024, but Notice 2023-62 (August 25, 2023) delayed its effective application to 2026 through a two-year administrative transition period running through December 31, 2025.
• A drafting error in § 603 struck IRC § 402(g)(1)(C); the notice confirms this does not eliminate catch-up contributions, which remain permitted both pre-tax and Roth.
• During the transition period, high earners may continue making pre-tax catch-up contributions, and plans without a Roth feature may continue to permit catch-ups.
• The delay responded to recordkeeper and plan-sponsor concerns that systems could not be ready by 2024.

Frequently asked questions

Do high earners have to make Roth catch-up contributions in 2024?

No. Notice 2023-62 established a two-year administrative transition period, so the mandatory-Roth requirement for high earners first applies in 2026. Pre-tax catch-up contributions may continue through 2025.

Who counts as a high earner for this rule?

A participant whose wages from the plan-sponsoring employer in the preceding calendar year exceeded $145,000, a threshold indexed for inflation. The measure is based on FICA wages.

Did the SECURE 2.0 drafting error eliminate catch-up contributions?

No. Although § 603 struck IRC § 402(g)(1)(C), Notice 2023-62 confirmed that catch-up contributions remain permitted on both a pre-tax and a Roth basis.

What should plan sponsors do during the transition period?

Use 2024 and 2025 to build the systems the 2026 rule will require: identifying participants above the wage threshold, coordinating with payroll to route their catch-ups to Roth, and adding a Roth feature if the plan lacks one.