Starting January 1, 2026, employees aged 50 or older who earned more than $150,000 in prior-year Social Security FICA wages from the employer sponsoring their retirement plan will be required to make age-based catch-up contributions as designated Roth (after-tax) contributions.
This change, part of the SECURE 2.0 Act of 2022, is intended to strengthen long-term savings by helping higher earners build potentially tax-free income for retirement. In Notice 2023-62, it was confirmed that plans may continue accepting pre-tax catch-ups through 2025 to allow time for updates to payroll, recordkeeping, and plan documents.
With the Treasury’s September 2025 final guidance, employers should confirm their plan is ready if this is a feature they would like to offer in their plan.
The SPARK Institute recommends that plan sponsors:
- Verify Roth contribution functionality within payroll and recordkeeping systems.
- Identify employes exceeding the $150,000 threshold
- Adopt a deemed Roth catch-up contribution source to simplify participant elections
- Coordinate early with third party service providers (third-party administrators and/or payroll vendors) and communicate with affected employees.
Early preparation can help prevent compliance issues and ensure employees continue contributing without interruption. Certain governmental plans and collectively bargained plans may benefit from extended statutory or regulatory applicability dates. Plan sponsors should speak with their legal counsel to review the applicability and timing of the Roth catch-up requirements for their specific plan circumstances.
Reach out to your Corebridge representative if you have questions.
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