Catch-Up Contribution Rules Are Changing Soon. Are You Ready?

Starting 2026, a delayed but now quickly approaching provision of the SECURE Act 2.0 will come into effect—and you should be ready. Highly paid individuals’ catch-up contributions will need to be put into a Roth account within their 401(k). But what constitutes a highly paid individual? What is this rule change trying to achieve? And how should you as a business owner or a financial advisor prepare?

Key takeaways:

Soon, highly paid individuals will have to make catch-up contributions on a Roth basis.
Highly paid individuals are those paid more than $145,000 in W-2 wages.
If your 401(k) doesn’t have a Roth option, these people might not be able to make catch-up contributions at all.
ePlan Services has implemented a simple way to activate a Roth option on your plan at no additional charge.
This rule change creates an opening for Financial Advisors to expand their book of business.

Catch up contribution rules are changing

Once you turn 50, the amount of money you can contribute to your 401(k) increases. This is called a catch-up contribution, and in 2025 it means you can put an extra $7,500 towards your golden years. When you are between the ages of 60-63, you are eligible for what’s referred to as a “super catch-up”, which is 150% of the regular catch-up amount. For 2025, that’s $11,250.

Usually, you’d simply put these contributions towards the source of your choice (pre-tax or Roth). However, as of January 1, 2026, highly paid individuals will be required to contribute their catch ups on a Roth basis.

A Roth contribution means you pay income tax on each dollar before it’s contributed, but qualified withdrawals are tax-free.

Who counts as a highly paid individual?

Individuals who earned more than $145,000 in the prior year in wages from the employer sponsoring their 401(k) are considered highly paid. They will be required to make any catch-up contributions on a Roth basis.

Only wages subject to FICA, on their W-2, count towards this threshold. Income streams like investment gains, revenue from a self-owned side business, or rental income are not counted.

Some people may work for multiple employers that use the same paymaster. In that case, wages from all those related employers may be added up to determine if the $145,000 threshold is met.

What is the impact to highly paid individuals?

Regular contributions up to the $23,500 level can be put in their source of choice, but highly paid individuals under this rule will have to make their extra catch-up contributions to the Roth source.

For those aged 60-63, super catch-ups are also subject to this rule.

If your 401(k) provider does not offer a Roth option, and you are highly paid, you might not be able to make catch-up contributions at all, putting you at a significant disadvantage in the important years leading to retirement.

What is the impact to businesses?

Highly paid individuals are often important to the functioning of an organization. Their compensation reflects their significance. Incorrect plan design—failing to offer a Roth option—could prevent these highly paid individuals from making catch-up contributions. In fact, all employees in your plan may be restricted from making catch-up contributions Retirement is often a keystone part of a company’s compensation package, and therefore a company that fails to update their plan may inadvertently create tension.

Even without the danger of limiting your employees’ ability to contribute, offering a Roth option is a good idea without downsides. It gives your people greater flexibility to save in the way that fits their needs best.

So, if you don’t already, update your 401(k) plan to offer a Roth option. Thankfully, with ePlan Services it’s easy.

How does a plan admin update their plan to offer a Roth option?

Simply email your request to administration@eplanservices.com, and our support team will amend your plan to offer a Roth option.

There is no additional charge to enable Roth on your plan.

If you’re not an ePlan Services customer, reach out to your plan provider for more information. Or consider switching to the low fee recordkeeper who can swap your plan in 24 hours.

I’m a financial advisor. What should I take away from this?

Perhaps unsurprisingly, not many business owners are informed of —or seek out—information about 401(k) rule changes. Therefore, rule changes like this one create opportunities for Financial Advisors who are positioned to offer expert guidance.

If you have business owners in your network who you know employ highly paid individuals, take the opportunity to reach out and make sure they’re prepared for the rule change. Even if you can help just one client retain one key person, you’ll have provided enormous value to them and their organization.