Beginning January 1, 2026, employees (age 50 or older) who are eligible to make catch-up contributions and who had wages exceeding $145,000 in the prior year (2025), indexed annually for inflation will be required to make those catch-up contributions on a Roth (after-tax) basis. This is a mandatory provision for all plans that currently allow Roth contributions. 

If your plan does not currently allow Roth contributions, you must amend your plan by October 1, 2025, to add this feature to comply with the new rules. 

If a plan chooses not to add Roth contributions but still allows catch-up contributions, then only employees with prior year wages under $145,000 (indexed) will be eligible to make catch-up contributions. 

To prepare for this change, plan sponsors should coordinate with their payroll providers and eligible employees to ensure proper setup and compliance ahead of the 2026 effective date.