CoAd Pay: SECURE 2.0 Roth Catch-Up Contribution Changes

Under the SECURE 2.0 Act, employees who earned more than $150,000 in FICA wages in the prior year must make their retirement catch-up contributions as Roth (after-tax) instead of pre-tax.

What's changing?

Under the SECURE 2.0 Act, certain employees are now required to make catch-up retirement contributions as Roth (after-tax) instead of pre-tax contributions.

Who does this apply to?

This applies to employees who:

 
• Earned more than $150,000 in the prior year in FICA wages
 
• Are eligible for catch-up contributions
 
• Choose to contribute above the standard retirement limit

What does this mean?

If these conditions are met, catch-up contributions must be made as Roth (after-tax) contributions.

Which Roth accounts count

Only Roth contributions within your employer-sponsored retirement plan, such as a Roth 401(k), are eligible.

What you may need to do

Before payroll can process Roth catch-up contributions, your retirement plan must:

 
1. Allow Roth contributions.
 
2. Be set up with your retirement provider to accept Roth deferrals.

If your plan does not currently support Roth contributions, you will need to work with your retirement provider to enable this feature.

How CoAd supports you

Once your plan is confirmed to support Roth after-tax contributions, CoAd can:

 
• Set up the appropriate Roth deduction in payroll
 
• Ensure contributions are processed correctly as after-tax

Note: employees can have both Roth 401(k) and traditional 401(k) deductions at the same time. The system automatically applies IRS contribution limits across the combined total.

Need help?

If you're unsure whether your plan supports Roth contributions or need assistance updating your setup, please contact your retirement provider or reach out to our support team.

Frequently asked questions

Which employees have to make catch-up contributions as Roth?

The requirement applies to employees who earned more than $150,000 in the prior year in FICA wages, are eligible for catch-up contributions, and choose to contribute above the standard retirement limit. If those conditions are met, the catch-up contributions must be made as Roth (after-tax) contributions.

Does a Roth IRA satisfy this requirement?

No. Only Roth contributions within your employer-sponsored retirement plan, such as a Roth 401(k), are eligible. A Roth IRA is not applicable because it is not processed through payroll.

What has to be in place before payroll can process Roth catch-up contributions?

Your retirement plan must allow Roth contributions and be set up with your retirement provider to accept Roth deferrals. If your plan does not currently support Roth contributions, you will need to work with your retirement provider to enable this feature.

Can an employee have both Roth and traditional 401(k) deductions?

Yes. Employees can have both Roth 401(k) and traditional 401(k) deductions at the same time, and the system automatically applies IRS contribution limits across the combined total.

What does CoAd do once my plan supports Roth contributions?

Once your plan is confirmed to support Roth after-tax contributions, CoAd can set up the appropriate Roth deduction in payroll and ensure contributions are processed correctly as after-tax.