---
title: "Final Regulations Clarify Catch-Up Contribution Rules Under SECURE 2.0"
date: 2025-10-03
author: "siteadmn"
featured_image: "https://contempohcm.com/wp-content/uploads/2025/09/2025-1001-Contempo_Final-regs-clarify-catch-up-contribution-rules-under-SECURE-2.0.jpg"
categories:
  - name: "Payroll Management"
    url: "/category/payroll-management.md"
tags:
  - name: "Secure 2.0"
    url: "/tag/secure-2-0.md"
---

# Final Regulations Clarify Catch-Up Contribution Rules Under SECURE 2.0

The SECURE 2.0 Act, part of the 2022 year-end omnibus spending package, introduced sweeping changes to retirement savings rules. Among the most significant updates are provisions affecting catch-up contributions to qualified retirement plans. To address employer concerns and implementation challenges, the U.S. Department of the Treasury and IRS recently issued **final regulations** providing clarity on these rules.

## Key Highlights of the Final Regulations

**1. Mandatory Roth Treatment for High Earners**  
Starting with taxable years after **December 31, 2026**, employees aged 50 or older who earned more than **$145,000** in the prior year (indexed for inflation) must make catch-up contributions on a **Roth basis**. This means contributions will be made with after-tax dollars rather than pre-tax deferrals.

**2. Increased Catch-Up Limits for Certain Age Groups**  
While the standard catch-up limit for 2025 is **$7,500** for most 401(k), 403(b), and governmental 457 plans, the final regulations introduce higher limits for specific participants:

- **Ages 60–63:** Up to **150% of the standard catch-up amount**.
- **SIMPLE plans:** 110% of the standard amount, and 150% for ages 60–63.

## Notable Changes from Proposed Rules

- **Wage Aggregation:** Employers can aggregate wages from certain related employers to determine if an employee meets the $145,000 threshold.
- **Correction Methods:** Plans can fix errors by either:
- Reclassifying pre-tax contributions as Roth and reporting on **Form W-2**, or
- Making an **in-plan Roth rollover** and reporting on **Form 1099-R**.  
    Corrections are only required if erroneous pre-tax catch-up contributions exceed **$250**.

## Implementation Timeline

- The Roth catch-up requirement applies to contributions for **tax years beginning after 2026**.
- Plans may adopt the rule earlier using a **reasonable, good-faith interpretation**.
- The IRS confirmed that the **transition relief period under Notice 2023-62 ends December 31, 2025**.

## Next Steps

Employers should review plan documents, payroll systems, and participant communications to ensure compliance. For assistance with SECURE 2.0 implementation and managing retirement plan costs, contact our team.

©2026

### **FAQs**

**What is the Roth catch-up rule under SECURE 2.0?**  
The Roth catch-up rule requires employees aged 50+ earning more than $145,000 in the prior year to make catch-up contributions on an after-tax Roth basis starting in 2027.

**When do the new catch-up contribution rules take effect?**  
The mandatory Roth treatment applies to tax years beginning after December 31, 2026. Plans may adopt the rule earlier under a reasonable interpretation.

**Who must make Roth catch-up contributions?**  
Employees aged 50 or older with prior-year wages exceeding $145,000 (indexed annually) must make Roth catch-up contributions.

**What are the new catch-up limits for ages 60–63?**  
Participants aged 60–63 can contribute up to 150% of the standard catch-up limit for qualified plans.

**Can employers implement the Roth rule before 2027?**  
Yes, plans can adopt the Roth catch-up rule early using a reasonable, good-faith interpretation of the law.