Catching the Roth Wave: Payroll Pitfalls and Practical Fixes for the New Mandatory Roth Catch‑Up Requirement for Retirement Plans
Beginning January 1, 2026, age 50+ catch‑up contributions for “high‑paid participants” of 401(k), 403(b), and governmental 457(b) retirement plans must be made on a Roth basis. As a result, employers must identify who is a “high-paid participant” and ensure that corresponding catch-up contributions are characterized as Roth — even if a participant’s standing catch-up deferral election is pre‑tax. The Internal Revenue Service (IRS) recently released final regulations implementing the mandatory Roth catch-up, which will create pressure points for payroll systems, retirement plan recordkeepers, and plan sponsors. This update summarizes the new mandatory Roth catch-up requirement, highlights selected issues for payroll and human resources to consider, and recommends solutions to reduce compliance risk. The New Mandatory Roth Catch‑Up Rule Under final IRS regulations, a catch‑up eligible participant with FICA wages paid by applicable employer(s) above a wage thresh...