2026 Roth & Catch-Up Contribution Updates:
A Compliance Guide for Plan Sponsors
For plan years beginning on or after January 1, 2026, significant changes to qualified retirement plans driven by the SECURE 2.0 Act are now in effect. These updates introduce new contribution limits and mandatory Roth requirements for high earners — those earning over $150,000 in FICA wages. Plan sponsors and administrators must act now to address the compliance, payroll, and record-keeping adjustments required. At Kal Onomato, our retirement planning advisory team helps Florida businesses and plan sponsors navigate every dimension of these changes with confidence.
What Are the 2026 Catch-Up Contribution Rules?
The 2026 SECURE 2.0 updates introduce a tiered contribution structure that distinguishes between standard elective deferrals, standard catch-up contributions for employees age 50 and over, and a new elevated “Super Catch-Up Tier” specifically for participants aged 60 through 63. This tiered architecture allows older employees nearing retirement to accelerate their savings — but it also introduces meaningful administrative complexity for plan sponsors managing payroll, contribution routing, and record-keeping simultaneously.
Understanding the exact limits for each tier is the foundation of compliance. Florida businesses sponsoring 401(k) and 403(b) plans must ensure their payroll systems, plan documents, and participant communications all reflect the correct limit for each employee’s age bracket. Our financial advisory team at Kal Onomato helps plan sponsors map every employee cohort to the correct contribution tier and confirm that payroll systems are enforcing the right limits automatically.
The annual limit for standard pre-tax elective deferrals for most 401(k) and 403(b) plans. Applies to all eligible participants regardless of age.
Additional contribution permitted for employees age 50 or older by year-end. ($4,000 for SIMPLE plans.) Subject to mandatory Roth rule for high earners.
Elevated limit for participants who attain age 60, 61, 62, or 63 during the plan year. ($5,250 for SIMPLE plans.) The highest savings window available.
2026 Contribution Limits — Complete Reference Table
| Contribution Type | Eligible Participants | 401(k) / 403(b) | SIMPLE Plans | Roth Required? |
|---|---|---|---|---|
| Traditional Elective Deferrals | All eligible employees | $24,500 | Varies | Optional |
| Standard Catch-Up | Age 50+ by year-end | +$8,000 | +$4,000 | Mandatory if $150K+ |
| Super Catch-Up (Ages 60–63) | Attaining age 60, 61, 62, or 63 | +$11,250 | +$5,250 | Mandatory if $150K+ |
| Total Maximum (Age 50+, under 60) | High earner age 50–59 | $32,500 | — | Catch-Up = Roth |
| Total Maximum (Ages 60–63) | High earner Super tier | $35,750 | — | Catch-Up = Roth |
The Mandatory Roth Catch-Up Rule — The Most Critical Change of 2026
The most consequential compliance change taking effect in 2026 is the mandatory Roth catch-up provision. Under this rule, high-income employees who are age 50 or older can no longer make pre-tax catch-up contributions. All catch-up contributions made by employees who meet the income threshold must be designated as Roth — meaning after-tax — contributions. This change affects both the employee’s tax planning and the plan sponsor’s administrative infrastructure simultaneously.
Who Is Subject to the Mandatory Roth Catch-Up?
The Roth mandate applies to employees who satisfy both of the following conditions simultaneously. Meeting only one condition does not trigger the requirement — both must be true for an employee to be subject to the mandatory Roth designation for their catch-up contributions.
⚠️ Critical warning for plan sponsors: If your plan currently allows catch-up contributions but does not offer a Roth contribution option, you must amend the plan to add one. Without this amendment, high earners who are age 50 or older will be completely prohibited from making any catch-up contributions — resulting in a significant, avoidable reduction in retirement savings for your most highly compensated employees.
Compliance Obligations — What Plan Administrators Must Do
The transition to mandatory Roth catch-ups requires robust administrative updates across payroll processing, plan documentation, contribution routing, and participant communication. Plan sponsors who address these requirements proactively will avoid the costly correction protocols triggered by misclassified contributions. Our tax advisory team and financial advisory team work together to help Florida plan sponsors systematically address every compliance obligation.
📌 Payroll system capability is the linchpin of compliance. Your payroll system must be capable of tracking each employee’s prior-year FICA wages, automatically identifying employees who exceed the $150,000 threshold, and routing their catch-up contributions to Roth accounts rather than pre-tax buckets — automatically, every pay period. If your payroll provider cannot perform these functions without manual intervention, you have a compliance gap that must be addressed before contributions are processed in 2026. Our AI and IT advisory team at Kal Onomato assists Florida plan sponsors in auditing payroll system capabilities against the new requirements.
Three Compliance Areas Every Florida Plan Sponsor Must Address
- Payroll System Updates — Your payroll system must track prior-year FICA wages for every employee, automatically identify those exceeding $150,000, and route catch-up contributions to Roth accounts without requiring manual classification each pay period. Verify this capability with your payroll provider immediately.
- Universal Roth Availability — If the Roth catch-up feature is required for high earners, it must be made available to all eligible employees regardless of income level. Universal availability is a fundamental qualified plan requirement — making Roth available only to some participants violates plan qualification rules.
- Prompt Error Correction — Despite best efforts, contribution misclassification errors may occur. They must be corrected promptly using the correct protocol depending on timing. See the correction flow below for the specific steps required at each stage.
Contribution Error Correction Protocols
Caught Before W-2 Filing
Errors identified before the W-2 is filed can generally be corrected by reclassifying the pre-tax catch-up contribution as a Roth contribution. This is the lowest-cost and simplest correction path — catching errors early is critical.
Identified After W-2 Filing
Errors discovered after the W-2 is filed typically require an in-plan Roth rollover to correct the misclassified amount. This path is more complex and may involve additional participant notifications and reporting adjustments.
$250 or Less — No Correction Required
Errors involving amounts of $250 or less are considered de minimis and do not require formal correction. This exception provides meaningful administrative relief for small processing errors.
⚠️ The consequences of ignoring misclassified contributions are serious. Pre-tax catch-up contributions made by employees who should have designated them as Roth are treated as excess contributions — subject to excise taxes, mandatory correction protocols, and potential plan disqualification risk if patterns go unaddressed. The cost of proactive compliance is always far lower than the cost of post-hoc correction. Our tax advisory team helps Florida plan sponsors establish correction monitoring protocols before problems arise.
Four Strategic Steps for Florida Plan Sponsors
To ensure seamless implementation of the mandatory Roth catch-up requirement — and to protect your plan’s qualified status under the new rules — Florida plan sponsors should work through the following four steps systematically. Each step builds on the previous one. Our retirement plan advisory team manages this implementation process for Florida business clients from initial assessment through final employee communication. View our track record at kal-onomato.com/client-stories.
Review Plan Documents — Determine If a Roth Amendment Is Required
If your plan allows catch-up contributions but does not currently offer a Roth contribution option, you must amend the plan document to add one. Consult with your plan advisor to determine the amendment requirement and scope. Plan amendments must generally be executed by December 31, 2026 for most plans — but do not wait until year-end. Starting now ensures there is time to address any complications in the drafting and approval process.
Audit Payroll System Capabilities Against the $150,000 Threshold Rule
Verify directly with your payroll provider that their system can automatically identify employees whose prior-year FICA wages exceeded $150,000 and route their catch-up contributions to Roth accounts without manual intervention. Do not assume this capability exists — confirm it in writing, test it with sample data, and establish a clear protocol for what happens when an employee crosses the threshold mid-year or edge cases arise during processing.
Execute All Required Plan Amendments Before the Dec. 31, 2026 Deadline
Complete all necessary plan amendments by the general December 31, 2026 deadline for most plans. This includes adding Roth contribution capability if not already present, updating contribution election forms to reflect the tiered catch-up structure, and ensuring all plan documentation reflects the new limits accurately for the 2026 plan year and beyond.
Launch Targeted Employee Education — Especially for Ages 50+ and High Earners
Employees who are age 50 or older, and particularly those whose prior-year earnings exceeded $150,000, need clear, direct communication explaining what has changed, what is now required, and how their contribution elections may need to be updated. Poorly communicated changes generate employee confusion, payroll errors, and increased plan administration burden. Our advisory team helps Florida plan sponsors design participant communication materials that explain the new rules clearly and accurately.
2026 Limits Summary — Quick Reference
The following table provides a consolidated, at-a-glance summary of the 2026 contribution limits for plan sponsors, payroll administrators, and participant-facing communications. Note that high earners subject to the mandatory Roth catch-up rule must designate all catch-up contribution amounts — both standard and super catch-up — as Roth contributions. Our retirement plan advisory team at Kal Onomato can provide customized limit summaries tailored to your specific plan type and participant demographics upon request.
| Participant Category | Base Deferral | Catch-Up Add-On | Annual Maximum | Roth Catch-Up? |
|---|---|---|---|---|
| Under Age 50 | $24,500 | N/A | $24,500 | Not Applicable |
| Age 50–59 / 64+ (under $150K) | $24,500 | +$8,000 | $32,500 | Optional |
| Age 50–59 / 64+ ($150K+ earner) | $24,500 | +$8,000 Roth | $32,500 | Mandatory Roth |
| Ages 60–63 (under $150K) | $24,500 | +$11,250 | $35,750 | Optional |
| Ages 60–63 ($150K+ earner) | $24,500 | +$11,250 Roth | $35,750 | Mandatory Roth |
| SIMPLE Plan Age 50+ (standard) | Varies | +$4,000 | Varies | Mandatory if $150K+ |
| SIMPLE Plan Ages 60–63 | Varies | +$5,250 | Varies | Mandatory if $150K+ |
| ⓘ Note: High earners ($150K+ in prior-year FICA wages) must designate all catch-up contribution amounts as Roth (after-tax). Limits shown are for 401(k) and 403(b) plans unless otherwise noted. Consult a qualified CPA for plan-specific guidance. Source: SECURE 2.0 Act / IRS guidance effective Jan. 1, 2026. | ||||
How Kal Onomato Helps Florida Plan Sponsors Navigate the 2026 Changes
At Kal Onomato, our licensed CPA and retirement plan advisory team brings 15+ years of experience serving Florida businesses and plan sponsors. We understand that compliance changes like the SECURE 2.0 Roth catch-up mandate create work across multiple functions simultaneously — legal, payroll, record-keeping, and participant communication — and that coordinating all of them without dropping any threads requires disciplined project management and expert guidance. Our work for plan sponsor clients is fully aligned with IRS requirements for Florida-based organizations and Florida state accounting standards.
- Plan document review and Roth amendment coordination — our retirement plan advisory team reviews existing plan documents, determines whether a Roth amendment is required, and coordinates with your plan attorney or third-party administrator to ensure all amendments are executed correctly and on time.
- Payroll compliance audit and remediation — our AI and IT advisory team audits your payroll system’s capability to automatically apply the $150,000 FICA wage threshold, route contributions correctly, and flag edge cases — and coordinates any necessary remediation directly with your payroll provider.
- Contribution error identification and correction support — our tax planning team monitors contribution classifications for early error detection, applies the correct pre-W-2 and post-W-2 correction protocols when issues arise, and documents the correction process in compliance with IRS requirements.
- Tax-coordinated retirement strategy for high-earning participants — for employees now required to make Roth catch-up contributions, our tax advisory team evaluates the individual tax implications of the mandatory Roth designation and coordinates the broader retirement account structure — balancing pre-tax, Roth, and taxable accounts — to optimize lifetime tax outcomes.
- Participant communication and education materials — our advisory team develops participant-facing communication materials that clearly explain the 2026 changes, identify who is affected, and describe what action — if any — each employee needs to take. Clear, accurate communication reduces administrative burden and prevents errors downstream. Read our client outcomes at kal-onomato.com/client-stories or explore all services at kal-onomato.com/services.
📜 The Dec. 31, 2026 Amendment Deadline Is Approaching — Don’t Leave Plan Compliance to the Last Minute
Plan amendments, payroll system updates, contribution routing configurations, and employee communications all take time to execute correctly. Florida plan sponsors who begin this process now have the runway to address every compliance requirement thoughtfully. Those who wait until year-end face compressed timelines, elevated risk of error, and no time to correct problems before the deadline passes. Our retirement plan advisory team and tax planning team are ready to guide you through every step. Schedule your free consultation today →
Frequently Asked Questions — 2026 Roth Catch-Up Rules
Is Your Florida Plan Ready for the 2026 Roth Mandate?
Book a free 30-minute consultation with Kal. We will review your current plan document, assess your payroll system’s compliance capability, identify any amendment or correction obligations, and outline a clear action plan for meeting every 2026 SECURE 2.0 requirement before the deadline.
