Key takeaways:
- Effective January 1, for plan participants aged 50 or older who earned more than $150,000 in Social Security wages in 2025, any catch-up contributions must now go into the Roth 401(k) portion of their plan.
- Plan sponsors will need to confirm Roth availability in their plans, update their systems and documents with recordkeepers, and train HR and Benefits teams so they can help participants navigate the change.
- The change is also an opportunity to educate participants in the potential benefits of Roth contributions and remind them of other valuable plan features such as employer matches, automatic escalation options, or financial wellness resources.
Welcome to 2026! If you’re a 401(k) plan sponsor, there’s a big change that has arrived, and it’s one you’ll want to get ahead of.
Thanks to SECURE 2.0, catch-up contributions for certain employees are about to look very different. If you’re not prepared, this could lead to confusion, frustration, and missed savings opportunities for your participants. But with a little planning, you can turn this into a positive experience.
What’s changing?
Effective January 1, 2026, the rules for catch-up contributions have shifted for higher earners. For participants who are aged 50 or older and earned more than $150,000 in Social Security wages in 2025 (Box 3 on their W-2 statement), any catch-up contributions they make must now go into the Roth 401(k) portion of the plan.
The standard catch-up limit for 2026 will be $8,000, and for those aged 60 to 63, there’s an additional “super catch-up” of up to $11,250. These extra contributions can make a big difference in retirement savings, but only if participants know how to make them – and your plan is set up to allow it.
Why this matters for you
On paper, this sounds simple. In practice, it could be a big deal for a lot of plan sponsors. If your plan doesn’t currently offer a Roth 401(k) option, participants who meet these criteria will lose the ability to make catch-up contributions altogether. Imagine the frustration for employees who’ve relied on these contributions to boost their retirement savings or who’ve always made them on a pre-tax basis. That’s not just a compliance issue; it’s a communication challenge.
The good news? You can avoid those uncomfortable conversations by planning ahead.
What should you do now?
Start by reviewing your plan design. Does your plan offer a Roth options? If not, now is the time to consider adding them. This will likely involve updating plan documents and working closely with your recordkeeper to ensure systems are ready to process Roth catch-up contributions accurately.
Even if your plan already offers Roth contributions, don’t assume you’re in the clear. Participants need to know how to make these contributions, and that’s where HR and Benefits teams come in. Make sure your team understand the new rules and can explain the process clearly, whether it’s a few clicks on the recordkeeper’s website or a quick form submission.
That clarity and communication is critical. We often assume that because a feature exists, everyone knows how to use it. Spoiler alert: They don’t. Many participants struggle with the mechanics of making changes to their contributions, and this new rule adds another layer of complexity.
Turning compliance into opportunity
While this recent change may feel like a regulatory hurdle, remember: It’s also an opportunity to engage and educate your participants. Use this moment to help participants understand what Roth contributions are, how they differ from pre-tax contributions, and why this change might actually benefit them in the long run.
For example, Roth contributions are made with after-tax dollars, which means withdrawals in retirement are generally tax-free. For participants who expect to be in a higher tax bracket later, this could be a smart move. Framing the change as a potential advantage rather than an inconvenience can help participants feel more positive about the shift.
You can also use this communication to remind participants about other valuable features in your plan like employer matches, automatic escalation options, or financial wellness resources. A regulatory update might not sound exciting, but it’s a great excuse to re-engage employees with their retirement planning.
Practical steps for success
As we begin 2026, here are a few practical steps to keep in mind:
- Confirm Roth availability or start the process of adding Roth options now if needed.
- Update systems and documents with your recordkeeper.
- Train your HR and Benefits team so they can guide participants.
- Communicate with plan participants early and often.
In addition to the above, consider creating FAQs, hosting webinars, or sending targeted emails to employees who are likely to be affected. The more proactive you are, the smoother this transition will be.
The bottom line
SECURE 2.0’s Roth catch-up mandate is here, and it’s going to change the way many participants save for retirement. By preparing now, updating your plan, training your team, and communicating clearly you can turn a potential pain point into a positive experience.
As you kick off 2026, ask yourself:
- Does your plan offer Roth contributions?
- Are your systems and documents ready?
- Is your team prepared to guide participants?
Taking these steps today will help you avoid surprises and keep your participants on track for the retirement they’ve been planning.
IMPORTANT INFORMATION
The information contained herein is for educational purposes only and should not be construed as financial, legal or tax advice. Circumstances may change over time so it may be appropriate to evaluate strategy with the assistance of a financial professional. Federal and state laws and regulations are complex and subject to change. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of the information provided. Janus Henderson does not have information related to and does not review or verify particular financial or tax situations, and is not liable for use of, or any position taken in reliance on, such information.