Before the U.S. government shutdown, the Internal Revenue Service released final regulations implementing the Secure 2.0 Act’s changes to the retirement catch-up contribution rules.

The regulations, which provide guidance with respect to the new “super catch-up” contribution limit and to the Roth catch-up contribution mandate for certain high-income taxpayers, largely track the proposed regulations, with a few notable changes and clarifications based on comments received during the comment period.

With the IRS-granted transition window quickly closing, employers who sponsor retirement plans should be ready to administer the new rules in accordance with a “reasonable, good-faith interpretation” of the law. The final regulations don’t become effective until 2027, although the Roth catch-up mandate takes effect in 2026.

Regulations Governing Super Catch-Up Contributions

Starting in 2025, taxpayers ages 60 to 63 benefit from an enhanced catch-up contribution limit equal to the greater of $10,000 or 150% of the standard catch-up contribution limit ($11,250 for 2025, or 150% of the standard $7,500 limit). This super catch-up contribution is optional.

Concerns had existed over whether this enhancement would cause a retirement plan to violate the universal availability requirement in which all participants who are catch-up eligible are able to contribute the same catch-up amount. The final regulations confirmed that plans do not violate that requirement, assuming that all participants are entitled to contribute up to the statutory limit that applies to each participant.

However, the regulations clarify that if any plan within a controlled group permits super catch-up contributions, all plans within that controlled group must permit such contributions.

That said, employers can prohibit employees who are excluded from coverage testing from making super catch-up contributions, such as collectively bargained workers, without violating the universal availability requirement.

For 403(b) plans, the regulations confirm that plan sponsors can permit the super catch-up limit in addition to the special catch-up contribution for participants with at least 15 years of service.

Regulations Affecting the Roth Catch-Up Mandate

Starting in 2026, employees with at least $145,000 in FICA wages for the year must treat all catch-up contributions as Roth contributions. The FICA wages received by the employee in the prior year from the employer sponsoring the plan is the relevant dollar amount and will be adjusted for inflation in $5,000 increments.

The final regulations provide that wages may be aggregated in certain circumstances. If the employee's common law employer uses a common paymaster in accordance with IRC Section 3121(s), the plan may provide that the employee's common law employer is aggregated with one or more other employers using that common paymaster. Those aggregated employers may then be treated as a single employer sponsoring the plan for purposes of determining Roth catch-up eligibility.

Employers that are part of a controlled group or affiliated service group are also permitted to aggregate compensation across multiple entities for purposes of determining whether a participant is required to make Roth catch-up contributions. In both cases, aggregation is optional.

When a participant is required to make a Roth catch-up contribution, yet makes a pre-tax catch-up contribution, the final regulations allow plans to treat participants’ pre-tax catch-up election as though they had elected to make a Roth contribution. However, the participant must be given an effective opportunity to opt out of the deemed Roth election. Deemed elections must also stop within a reasonable time after the participant is no longer subject to the Roth mandate.

The final regulations also provide flexibility regarding correcting errors. Plan sponsors are not required to use the same correction method for all errors; rather, they must apply the same correction method for all similarly situated participants. For example, the plan can use the same correction method to correct the same type of error.

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