What Employers, Advisors, and Participants Need to Know About Section 603 of the Secure 2.0 Act

The SECURE 2.0 Act introduced several retirement plan updates, but one of the most significant—and now imminent—changes is the requirement for certain employees to make catch-up contributions on a Roth (after-tax) basis. After an IRS delay, this rule officially takes effect on January 1, 2026.

Who Is Affected?

This provision applies to employees who:

• Are age 50 or older, and
• Earned more than $145,000 (indexed for inflation) in FICA wages from the same employer in the prior year.

These individuals are referred to as Highly-Paid Individuals (HPIs).

What’s Required Under the New Rule

• Catch-up contributions must be Roth. All age 50+ catch-up contributions for HPIs must be made on an after-tax basis.
• No pre-tax catch-ups. Pre-tax catch-up contributions are no longer permitted for HPIs.
• Plans must offer Roth. If a 401(k) or 403(b) plan does not offer a Roth option, HPIs will be prohibited from making catch-up contributions.

Why It Matters

This rule affects both 401(k) and 403(b) plans and represents a significant shift in contribution strategy. Participants will need to prepare for:

• After-tax contributions. Roth contributions reduce take-home pay at the time of contribution.
• Tax-free growth. Provided conditions are met, Roth balances grow and distribute tax-free in retirement.
• Impact on retirement strategy. For some participants, this may require rethinking tax and retirement income planning.

What Plan Sponsors Should Do Now

To prepare for the January 1, 2026, enforcement date, plan sponsors should:

• Review plan documents to confirm Roth contributions are available.
• Coordinate with payroll providers to ensure systems can track Roth catch-up contributions.
• Educate participants—especially those affected—about how this change impacts contributions and tax planning.
• Consider discretionary amendments if the plan’s current design does not accommodate Roth catch-ups.

Key Takeaway

The SECURE 2.0 Roth catch-up contribution rule is more than just a compliance update—it impacts employee savings strategies and employer plan design. Sponsors who prepare early will ensure a smooth transition for participants and avoid disruption to contributions.

RMC Group can help you review your plan, identify any gaps, and implement the required changes before the 2026 deadline. Contact our office today at 239-298-8210 or click here to schedule a meeting with an RMC Retirement Professional.