Final 401(k) Catch-Up Regulations: What Employers and Savers Need to Know

The IRS has released final regulations on 401(k) catch-up contributions under the SECURE 2.0 Act, bringing clarity to how older and higher-income workers can save for retirement. These updates reshape how catch-up, and Roth contributions work and when employers must make changes.

Catch-up contributions have long been a tool for workers aged 50 and older to increase their retirement savings above the standard elective deferral limit.

SECURE 2.0 introduced two game changers:

1. Mandatory Roth “catch-up” treatment for certain higher earners. Those with prior-year wages over $145k, their catch-up contributions must be made with after-tax (Roth) dollars only.
2. “Super catch-up” increases for participants aged 60 – 63, giving them a higher ceiling for catch-up deferrals.

Final regulations were issued in September and brings much-needed clarity, and a firm timeline for when and how these changes apply. The final regulations become effective November 15, 2025.

Key Takeaways for Employers and Savers

The effective date for plans to comply with the final regulations begins January 1, 2027. The final regulations permit plans to implement the Roth catch-up requirement for taxable years beginning before 2027 using a reasonable, good faith interpretation of statutory provisions. Governmental and collectively bargained plans will get more time to implement the final rules.

Mandatory Roth Catch-Ups for High Earners. Employees aged 50 and older with prior-year FICA wages over $145,000 (adjusted annually for inflation) must make their catch-up contributions as Roth (after-tax). Workers under the income threshold can still choose pre-tax or Roth catch-ups, depending on their Plan’s design.

Deemed Roth Election. The final regulation allows for Plan Sponsors to automatically designate catch-up contributions as Roth through a “deemed Roth catch-up election.”  Essentially, even if a participant has only a pre-tax deferral election, the catch-up portion (if required to be Roth) will automatically treated as Roth.  This election will apply to catch-up contributions for all employees, regardless of income, unless the participant elects otherwise.

Correction Rules for Mistakes. If a plan mistakenly applies pre-tax instead of Roth contributions, the IRS allows correction through Form W-2 adjustments or in-plan Roth rollovers, ensuring accurate tax treatment.

The “Super Catch-Up” began this year for employees who are age 60, 61, 62, or 63. If their workplace plan allows for it, participants can contribute up to 150% of the standard catch-up limit. The final regulations clarify that this is an optional plan provision. Additionally, if one employer in a controlled group adopts the higher limit, other employers in the group must also adopt it. Participants should check with their Plan Administrator to see if they are able to make super catch-up contributions.

Action Steps for Employers to Take Now

The 401(k) catch-up final regulations give employers time to prepare and participants new ways to maximize savings.

• Review your 401(k) Plan Document to confirm it supports Roth contributions.
• Coordinate payroll and recordkeeping systems to identify employees with FICA wages above $145,000.
• Update employee communications to explain when and how catch-up contributions will change.
• Amend your plan by the end of 2027 to reflect the Roth catch-up and optional super catch-up provisions.

By 2027, high earners’ catch-ups must shift to Roth, while those aged 60 – 63 may start to accelerate their retirement savings now. Early planning will ensure compliance and smooth implementation when the new rules take effect.