S-Corp and whether or not to add ROTH provisions for 2026

[cheersmate]

The SECURE 2.0 final regs provide Plans are not required to add Roth provisions to continue Catch-up contributions in 2026; they also provide a "safe harbor" provision that can be added to the SECURE 2.0 Amendment for Plans that do not offer Roth contributions, to avoid tripping over the Universal Availability requirements (similarly situated employees for Catch-Ups) where the Plan Sponsor is Self-Employed (or Partners) and does (or could?) have a Non-Highly Compensated Employee (50+) who is a High Paid Individual ("HPI") for purposes of the 2026 Roth Catch-up rules. To avoid discrimination, the Plan can essentially "prohibit any HCE with any "compensation" in excess of the HPI FICA threshold from contributing Catch-up contributions in the following year. In doing so, you avoid the discrimination issue.

My questions are:

1. Can this "safe harbor" provision state it is only effective for the Plan Years in which there exists a Non-Highly Compensated Employee (50+) who is an HPI? If so, can the HCE owner therefore contribute pre-tax Catch-up?
2. Can or must an S-Corp Plan Sponsor incorporate a similar "safe harbor" due to the nature of S-Corp "control" over W-2 wages (albeit they should be reasonable) and dividends?
3. Can the spouse of the S-Corp owner continue to make pre-tax catch-up when prior year W-2 is less the HPI FICA threshold?  It seems to me they can since income is not "attributed" (therefore no effect on whether or not they are an HPI).

Thank you.

 

[Peter Gulia]

For anyone who might help cheersmate reason through those questions, here’s the final rule:

https://www.govinfo.gov/content/pkg/FR-2025-09-16/pdf/2025-17865.pdf.

The rule paragraphs cheersmate mentions [26 C.F.R. § 1.414(v)–2(b)(2)-(3)] are on page 44549 [page 23 of 27 in the pdf].