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Explains the SECURE 2.0 rule requiring high earners to make retirement catch-up contributions on a Roth after-tax basis. Covers the two criteria an employee must meet and what the change means for plan administration.
Under Section 603 of the SECURE 2.0 Act, high-earning employees who make catch-up contributions to an employer-sponsored retirement plan must designate those contributions as Roth (after-tax) rather than pre-tax.
Section 603 of the SECURE 2.0 Act changes how catch-up contributions work for high earners. The change is designed to help employees save more for retirement while ensuring compliance with IRS reporting and contribution requirements.
An employee must meet both criteria to be subject to the mandatory Roth catch-up treatment.
Employees must be age 50 or older in the upcoming calendar year. CoAd evaluates age based on the next year, not the current year.
Example: if the current year is 2025, the report evaluates eligibility for 2026. An employee who is 49 in 2025 but turns 50 in 2026 meets the age requirement and is included.
The employee must have $150,000 or more in year-to-date FICA subject wages. FICA subject wages are wages subject to Social Security and Medicare taxes. YTD represents total qualifying wages accumulated from the start of the current calendar year through the date the report is run.
To comply with Section 603, plan sponsors must:
Important: if a plan does not allow Roth contributions, catch-up contributions cannot be made by employees whose FICA wages are above the threshold.
CoAd provides a dedicated report to help employers identify employees who meet the eligibility requirements under Section 603 of the SECURE 2.0 Act for mandatory Roth catch-up contributions.
The report identifies employees who meet the age and compensation thresholds that trigger mandatory Roth treatment for catch-up contributions under Section 603. For each qualifying employee it lists:
Note: only employees who meet both qualifying criteria will appear on the report.
To prepare for the 2026 Roth catch-up requirement:
Under Section 603, high-earning employees making catch-up contributions to their employer-sponsored retirement plans are required to designate those contributions as Roth (after-tax). The change is designed to help employees save more for retirement while ensuring compliance with IRS reporting and contribution requirements.
An employee must meet both criteria: be age 50 or older in the upcoming calendar year, and have $150,000 or more in year-to-date FICA subject wages, meaning wages subject to Social Security and Medicare taxes. CoAd evaluates age based on the next year rather than the current year, so in 2025 the report evaluates eligibility for 2026.
If a plan does not allow Roth contributions, catch-up contributions cannot be made by employees whose FICA wages are above the threshold. To comply with Section 603, plan sponsors must support Roth contributions within their plan, track prior-year FICA wages to identify affected employees, and ensure payroll setup differentiates traditional pre-tax contributions from Roth catch-up contributions.
Navigate to Reports, type "Secure 2.0 Section 603 Mandatory Roth Catch Employees" in the Report Library search bar, and run the report. It lists each qualifying employee's name, age projected for the upcoming calendar year, and year-to-date FICA subject wages, and only employees who meet both qualifying criteria appear.
Confirm with your plan provider that your retirement plan supports Roth contributions, review employee wages in CoAd to ensure prior-year FICA wage data is accurate and up to date, and communicate the upcoming changes to employees. Final determination of plan compliance should always be coordinated with the employer's retirement plan provider or advisor.