Posted on September 24, 2025

The SECURE 2.0 Act made significant changes to retirement plan rules, including new requirements for catch-up contributions. While the law was passed several years ago, plan sponsors have been waiting for final guidance on how to apply these provisions. After reviewing public feedback on the proposed regulations, the IRS has now issued final regulations clarifying two key changes:

• Higher-income participants must make catch-up contributions as Roth, and
• Participants aged 60-63 will soon be eligible for higher catch-up limits.

For guidance on implementing these updates and understanding how they affect plan compliance, visit our Tax Services page to learn how Topel Forman advisors help clients navigate evolving IRS regulations.

What SECURE 2.0 changed – and why clarification was needed

SECURE 2.0 introduced two major changes to catch-up contributions. First, it requires higher-income participants to make their catch-up contributions on a Roth (after-tax) basis. It also allows individuals aged 60 to 63 to make enhanced catch-up contributions above the standard age 50+ catch-up limit. These provisions raised several questions for employers and administrators. Should plans track whether a participant’s income crosses the threshold and automatically apply Roth treatment? If a participant works for multiple employers, must the plan consider income from all sources? What happens if the participant fails to elect Roth treatment? And how should systems implement the new age-based limits? The final regulations address these questions and provide a clearer roadmap for compliance.

Required Roth contributions for high earners

Participants who earned more than $145,000 in FICA wages from the employer (or related employers) in the prior calendar year must make all catch-up contributions on a Roth basis. This threshold is indexed annually. Plan must aggregate FICA wages paid by all related employers under common control or part of an affiliated service group (as defined by IRC sections 414(b), (c), or (m)). If a participant worked for multiple entities within a corporate group, their wages must be combined to determine whether the threshold is met. If a high earner fails to elect Roth treatment, the plan may apply a “deemed Roth” rule, allowing those contributions to be treated as Roth by default. This helps avoid compliance issues caused by participant inaction. If catch-up contributions are incorrectly treated as pre-tax when they should have been Roth, the plan can fix it using the IRS’s existing correction programs without disqualifying the plan.

Increased catch-up limits for ages 60-63

Beginning in 2025, the SECURE 2.0 Act allows participants aged 60 through 63 to make larger catch-up contributions than those permitted at age 50 and above. Specifically, participants in this age group can contribute the greater of $10,000 or 150% of the regular catch-up limit for the year. This enhanced limit applies only in the calendar year when the participant is age 60, 61, 62, or 63. Once a participant turns 64, the standard age-based catch-up limit applies again. Plan sponsors will need to ensure that their systems can correctly identify eligible participants based on age and apply the higher limit only during the applicable years. The rules also allow plans to restrict the use of these increased limits to Roth contributions if desired, as long as the plan document is written accordingly.

Implementation Timeline and Key Effective Dates

The increased catch-up limit for participants aged 60 to 63 becomes effective in 2025. The Roth requirement for high earners takes effect for taxable years beginning after December 31, 2026, with full compliance required in 2027. In the meantime, the IRS has extended administrative relief: plans that make a reasonable, good-faith effort to follow the rules will not be penalized during the transition period. Governmental and collectively bargained plans have more time to comply with the Roth requirement. However, early adoption is permitted, and the IRS has made clear that transition relief will end after 2026.

How Plan Sponsors Can Prepare for SECURE 2.0 Compliance

To prepare, plan sponsors should review their payroll and recordkeeping systems to ensure they can track FICA wages across related employers and apply the Roth requirement accurately. Systems must also be able to identify participants aged 60 to 63 and apply the correct catch-up limits. Clear communication with participants will also be critical. Employees nearing age 60 should be aware of the opportunity to contribute more. High earners should understand why their catch-up contributions must be Roth. Targeted emails, FAQs, and examples can make these rules more accessible without overwhelming employees with technical language. Finally, sponsors should document their compliance processes, particularly during the transition period. Written procedures and clear internal policies will help demonstrate good-faith compliance if the plan is audited.

Next Steps for SECURE 2.0 Act Implementation

Although full implementation may seem far off, the timeline is already underway. Employers should act now to ensure compliance and protect their employees’ long-term retirement outcomes.

Partner with Topel Forman’s Tax Services to stay ahead of SECURE 2.0 Act updates, prepare accurate payroll and plan documentation, and align your organization with IRS compliance requirements. Our experienced team helps businesses navigate complex regulatory changes with clarity and confidence.