Significant changes to 401(k) plans are coming in 2026, and if you make age 50+ catch-up contributions, you may need to be prepared. Under SECURE Act 2.0, employees earning above a certain threshold will be required to make catch-up contributions as Roth rather than pre-tax.
One of the biggest points of confusion is how the IRS determines who must make catch-up contributions as Roth rather than as pre-tax. Many assume that the threshold is based on the traditional highly compensated employee (HCE) definition used for 401(k) nondiscrimination testing—but it’s not. Instead, the IRS uses a lower compensation limit based on FICA wages, which are often lower than HCE wages because of deductions, as we’ll explore later in the article. This means more employees will be impacted than expected.
For employers, this change isn’t just about switching to Roth—it has implications for ADP testing, plan administration, and payroll processing. If your plan does not offer Roth contributions, certain employees may lose the ability to make catch-up contributions entirely.
Here’s what’s changing, who is affected, and what plan sponsors need to do to prepare.