Why 2026 Matters: Catch-Up Contributions Move to Roth Under Section 603

Since the SECURE 2.0 Act (which stands for Setting Every Community Up for Retirement Enhancement, in case you need a helpful reminder) took effect in January 2023, more than half of its nearly 100 provisions have already been implemented—with additional changes still ahead. 

One key provision taking effect January 1, 2026, is Section 603, which employers and employees both should keep on their radar. Section 603 significantly changes how catch-up contributions are treated for higher income retirement plan participants. Although originally scheduled to be already in effect, administrative and tracking complexities prompted the IRS to delay enforcement. 

Beginning in 2026, participants who earned more than the applicable wage threshold (generally $145,000 in prior-year wages, indexed for inflation) will be required to make all catch-up contributions on a Roth basis. These contributions will be made with after-tax dollars, while qualified withdrawals in retirement remain tax-free. 

In addition, if a plan permits catch-up contributions for participants subject to mandatory Roth treatment, the plan must also allow all eligible participants—regardless of income—to designate their catch-up contributions as Roth. 

This delay has given employers, payroll providers, and recordkeepers time to update systems, coordinate data tracking, and educate participants. For employees, the change may affect take-home pay and long-term tax planning, making advance preparation essential. 

With 2026 approaching, employers should review their plan design, confirm Roth capabilities, and begin proactive communication to ensure a smooth and compliant transition. 

To help you prepare, our team has created a SECURE 2.0 Act: What’s Next? one sheet outlining upcoming provisions and retirement plan contribution limits. 

As always, this overview is intended as a starting point. Many provisions include nuances and exceptions. For guidance specific to your organization, please reach out. Our team is happy to help.