Beginning January 1, 2026, the SECURE Act 2.0 will require that catch-up contributions for higher-paid employees be made on a Roth (after-tax) basis.
This provision—originally set to take effect in 2024—was delayed by the IRS to give employers and plan administrators more time to implement changes. On September 15, 2025, the IRS released final regulations confirming no further extensions would be granted. Plans must comply starting with the 2026 tax year.
Who Is Affected
The mandatory Roth catch-up rule applies to participants in:
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401(k) plans (including Solo 401k plans)
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403(b) plans
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Governmental 457(b) plans
It does not apply to:
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Non-governmental 457(b) plans (which cannot have Roth contributions)
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SIMPLE IRA plans (which already allow Roth contributions)
Roth Requirement for Catch-Up Contributions
The rule applies to both:
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Regular catch-up contributions — for participants age 50 or older, and
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“Super catch-up” contributions — for participants who turn 60, 61, 62, or 63 in the year (a new feature under SECURE 2.0).
Under the new regulation, catch-up contributions must be Roth if the participant is a “high-paid employee.”
Definition of High-Paid Employee
A high-paid employee is someone who earned more than $145,000 (indexed) in W-2 wages from the employer sponsoring the plan during the previous year. This threshold amount in W-2 wages is expected to be changed by the IRS before the end of 2025, however.
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This rule does not impact self-employed individuals whose income comes from sole proprietorship or partnership earnings, since they do not receive W-2 wages.
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However, if your self-employed business operates as an S-Corporation or C-Corporation, you do receive W-2 wages, meaning the Roth catch-up requirement will apply to you.
How is the Roth solo 401k catch-up wage threshold determined?
For a self-employed business taxed as an S-corporation or C-corporation, contributions including catch-up contributions to the solo 401k are based on W-2 wages from the self-employed business. To determine if the solo 401k participant is subject to this mandatory Roth catch-up contribution rule, her or she will need to review his or her Social Security wages reported in Box 3 of Form W-2, Wage and Tax Statement, for the prior year. This rule does not apply during the participant’s first year of employment, but may apply the following year based on the participant’s earnings. The income threshold is adjusted each year starting in 2025 by $5,000 to take into account inflation.
Key Takeaways for Solo 401k Owners
For Solo 401k participants:
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If you’re self-employed with no W-2 wages, you’re exempt from the mandatory Roth catch-up rule.
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If your Solo 401k is sponsored by an S-Corp or C-Corp and your W-2 income exceeds $150,000 (indexed) in 2025, your catch-up contributions for 2026 must be Roth.
The IRS published the final 2025 wage threshold for determining who qualifies as “high-paid” in November 2025.
Does Mandatory Roth Catch-Up Affect Employer Contributions?
No. Employer profit-sharing contributions may still be made:
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Pre-tax or
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Roth (if your plan allows)
Catch-up rules only affect employee contributions.
Does This Affect the Mega Backdoor Roth Strategy?
No. The Mega Backdoor Roth uses voluntary after-tax contributions, which are entirely separate from catch-up contributions.
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Catch-up contributions cannot be used for the Mega Backdoor Roth
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Mega Backdoor Roth contributions remain unaffected by these new rules.
✔ 1. Review and optimize your 2025 W-2 wages
Because you control your S-Corp or C-Corp salary, you may choose to keep W-2 wages ≤ $150,000 in 2025 to avoid the mandate in 2026. Work with your CPA or payroll provider to run projections.
✔ 2. Ensure your Solo 401(k) documents allow Roth contributions
If not, amend or restate your plan before year-end 2025.
✔ 3. Confirm your plan supports catch-up contributions
Some low-cost provider plans do not support advanced contribution types.
Key Dates You Must Know
January 1, 2026
Mandatory Roth catch-up requirement begins.
January 1, 2027
IRS enforcement period begins—meaning no administrative grace period after 2026.
Tax Year 2025 (Planning Year)
Your 2025 W-2 wages determine whether the Roth mandate applies in 2026.
What About Late-Year W-2 Income or New Businesses?
A few special cases clarified in the article:
✔ New S-Corp/C-Corp formed during 2026
If you had no W-2 wages in 2025, the Roth mandate does not apply for 2026—even if you earn $300,000 in W-2 wages in 2026.
✔ W-2 wages under $150,000
If you earn $130,000 in W-2 wages, you are exempt, and catch-up contributions may still be pre-tax.
How Married Couples Are Affected
The $150,000 wage test applies per individual, not per household.
Example:
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Spouse A earns $160,000 → Roth catch-ups required
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Spouse B earns $90,000 → Pre-tax or Roth catch-ups allowed
Even if both participate in the same Solo 401(k) plan, each spouse’s W-2 wages are evaluated separately.
Summary
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Effective date: January 1, 2026
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Applies to: 401(k), 403(b), and governmental 457(b) plans
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Exemptions: Non-governmental 457(b) and SIMPLE IRA plans
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High-paid threshold: $145,000+ in prior-year W-2 wages (indexed)
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Impact on Solo 401k: Applies only to S-Corp/C-Corp owners with W-2 wages
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Catch-up types affected: Regular (50+) and Super (ages 60–63) catch-up contributions
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IRS confirmation: Final regulations issued September 15, 2025; no further delay
✅ Stay compliant.
If your Solo 401k is sponsored through an S-Corp or C-Corp, make sure to plan for Roth-only catch-up contributions starting in 2026.
Questions
Are catchup contributions required to be Roth starting January 1 based on the new law for income over 150k? Do the plan documents need to be updated? Also dose the voluntary after tax option remain?
