SECURE 2.0 Roth Mandate: Preparing for 2026 with Confidence

The IRS has finalized regulations for the SECURE 2.0 Act’s Roth catch-up contribution rule, and the January 1, 2026, compliance deadline is fast approaching. For many employers, this mandate adds new layers of complexity: payroll and benefits teams must adapt to changing contribution rules, coordinate with recordkeepers, and communicate clearly with impacted employees, all while keeping regular payroll operations running smoothly.

Modern workforce technology can make this transition far easier. Automation, data integration, and clear workflows can help manage compliance without adding administrative burden.

What’s changing

Beginning January 1, 2026, employees aged 50 or older who earned more than $145,000 in Social Security-taxable wages with the same employer during the prior year must make their catch-up contributions as Roth (after-tax) contributions. Pre-tax catch-up contributions will no longer be allowed for these employees, referred to by the IRS as Roth Catch-Up Required (RCR) employees.

Because pre-tax catch-up contributions will no longer be permitted for these employees, employers must ensure that their plans include a Roth option if they want to allow catch-up contributions at all.

What employers need to know

The IRS final regulations outline several key requirements that will directly affect payroll and plan administration:

• Mandatory Roth treatment for high earners age 50 +: Payroll systems must block pre-tax catch-up contributions for affected employees.
• Cross-entity wage tracking: Employers must consider how their plan will track all Social Security-subject wages (FICA wages) across their related entities to determine RCR eligibility.
• Reporting: Employers must identify RCR employees once prior-year payroll is complete and share this data with their recordkeepers.
• “Deeming” elections: Plan sponsors may elect to automatically treat pre-tax catch-up elections as Roth contributions where applicable.
• Employee communication: Employers must notify impacted employees and allow them to change or stop elections if desired.
• Plan design: Plans must allow Roth contributions if the employer wants to continue offering catch-ups at all.

How technology simplifies compliance

Modern, intelligent payroll and HR systems can significantly reduce manual effort. The right technology can:

• Automatically identify employees aged 50 + who exceeded the $145,000 wage threshold in the prior year.
• Apply safeguards that prevent ineligible pre-tax catch-up contributions.
• Reclassify contributions seamlessly from pre-tax to Roth based on plan rules, minimizing disruption for employees.
• Centralize data across payroll and benefits platforms to make reporting and coordination with recordkeepers straightforward.
• Support automation of year-end eligibility reports and employee notifications, reducing time-consuming administrative work.

What to do next

To stay on track ahead of the January 2026 mandate:

• Confirm your plan includes a Roth option. Work with your recordkeeper or plan administrator to ensure the Roth feature is active.
• Decide whether to “deem” elections. Determine if pre-tax catch-up elections will be automatically treated as Roth for affected employees.
• Plan your communications. Draft clear employee notices and FAQs explaining how the rule affects catch-up contributions.
• Coordinate with your payroll provider or technology partner. Most systems should now support Roth-catch-up compliance testing and reporting.
• Begin year-end testing and readiness checks. As of November 2025, most major payroll systems and recordkeepers have released Roth-catch-up testing tools or reports to validate configuration ahead of January 1, 2026.

Key dates

• Before end of 2025: Year-end testing and validation recommended to confirm Roth eligibility and configuration.
• January 1, 2026: SECURE 2.0 Roth catch-up mandate takes effect for plan years beginning in 2026.

In summary

The SECURE 2.0 Roth mandate represents a major evolution in retirement plan administration. Employers that leverage modern payroll and benefits technology — particularly those with automation, data integration, and built-in compliance capabilities — can navigate these changes with minimal disruption. By preparing now, aligning with recordkeepers, and testing systems before year-end, organizations can ensure a smooth transition into 2026.

Note: UKG customers may visit the SECURE 2.0 Act Community page for more information and resources around leveraging their UKG solutions to meet SECURE 2.0 Act requirements. 

Looking for a simpler and more accurate way to manage compliance for your organization? UKG has you covered. Learn more.