Mandatory Roth Catch Up related

[Jakyasar]

Hi

As not being a DC person and dealing with very few DC plans, I have a really stupid question as I could not find anything on it.

Owner only plan, owner (over 50 years old) makes 50k in w-2 and makes full deferral plus catch up.

They are required to have Roth catch up, correct?

The plan also needs to be amended to provide Roth deferrals/catch up as well by 1/1/2026, correct?

Sorry if this was asked before.

[Peter Gulia]

Jakyasar seems to describe a situation in which, at least for 2026, no participant will be constrained to make age-based catch-up contributions as Roth contributions because no participant will have had 2025 Social Security wages more than $150,000.

BenefitsLink mavens, if the plan sponsor is confident no participant will be § 414(v)(7)-constrained to make catch-up deferrals only as Roth contributions, do you think it’s safe for such a plan sponsor to omit a Roth-contribution provision?

[ratherbereading]

It seems safe to omit, but they also can either:  add Roth just "in case" /  eliminate catch up contributions / eliminate catchcup contributions for anyone earning under $150,000. 

[BG5150]

If it's owner only, why not just add it anyway?

[Jakyasar]

This is simply a general discussion to make sure I understand the concept properly.

The question I am asking and trying to confirm my understanding: the Roth catch up is solely based on lookback salary regardless of ownership, salary is based on w-2 box 3.

Looks like sole props and partners with k-1's are exempt from this.

So, per my example above and my understanding, the owner who makes 50k in salary does not need Roth catch up i.e. normal catch up.

One more thing, as explained by a friend, the plan needs to have Roth provisions in place before the first Roith catch up contribution.

Any comments/corrections/missed information?

[Pam Shoup]

Jayasar, you are correct.

1. Highly Paid Individuals for 2026 are those that earned more than $150,000 (indexed) in 2025, based on FICA wages (Box 3 of W-2).  It is a lookback provision.

2. Those without W-2 wages (i.e. sole props, partners) are currently exempt from having to make catch-up as Roth.

3. Roth provisions must be in place before the first Roth contribution.  The timing of the Roth catchup contribution is irrelevant. The first Roth dollar deposited can be counted as Roth catchup. The participant does not need to exceed the 402(g) limit for the contribution to be counted as catch-up.

4. One note of caution if you have HPIs that solely earn W-2 and are not HCEs: if the plan does not permit Roth and the HCEs get to make catchups (pre tax) because they don't earn W-2, but the HPIs are prevented from catchups, then you have a benefits, rights and feature issue.

In your example, since owner makes $50k in W-3 income, they are not subject to the Roth Catchup requirement.

[Jakyasar]

Pam, thank you for your input and comments.

[WCC]

15 hours ago, Pam Shoup said:

The timing of the Roth catchup contribution is irrelevant. The first Roth dollar deposited can be counted as Roth catchup. The participant does not need to exceed the 402(g) limit for the contribution to be counted as catch-up.

I would like to make one comment to this statement to confirm my understanding. I agree that the timing is irrelevant. However, I don't believe the Final Regulations change the nature of a catch-up. Meaning a catch-up is still an amount that exceeds a limit, but any Roth deposit may satisfy the requirement. 

For example, let's say a 401k plan document is written to not match catch-up contributions. 

• In January 2026, a participant (age 55) funds $8,000 Roth and $0 pre-tax
• February - December the participant funds $24,500 pretax. $0 Roth

The Roth dollars satisfy the rule, but they are not catch-up dollars. The final $8,000 pre-tax dollars are still the catch-up dollars and stay as pre-tax. Therefore if a plan uses a pay period match formula, the Roth dollars are matched, the final $8,000 of pre-tax is not.

This may be semantics, but I would change the statement to say: The first Roth dollar deposited can be used to satisfy the Roth catch-up requirement.

[Pam Shoup]

WCC - thank you for the clarification. Of course, the people that make these rules don't have to communicate all the nuances to plan sponsors/participants!

[John Feldt ERPA CPC QPA]

Regardless, the plan document likely needs to add some interim good-faith language by the end of 2026 to comply with the law in written form. Thus, the written plan would comply with the possibility that an employee could have have deferred a catchup and their prior W-2 Box 3 FICA wages exceeded the limit that would require such catchup be treated as Roth. 

[PainPA]

Stating something obvious.... Is this Highly Paid Individuals determination for 2026 plan centric at $150,000 (indexed) in 2025?  In other words is does not matter on other outside interests and it does not matter what a new hire made with a previous employer.

[John Feldt ERPA CPC QPA]

That’s correct.

[C. B. Zeller]

On 11/26/2025 at 8:49 AM, PainPA said:

Is this Highly Paid Individuals determination for 2026 plan centric at $150,000 (indexed) in 2025?  In other words is does not matter on other outside interests and it does not matter what a new hire made with a previous employer.

It's actually based on the employer, determined without regard to controlled groups or affiliated service groups. So if you have a plan sponsored by two companies, A and B, which are members of a controlled group, and employee X earns $100,000 from each A and B, then even though their plan comp is $200,000, they are not subject to Roth catch-up from either employer since their comp from any employer was not greater than the limit. Meanwhile if you have employee Y in the same plan who earns $180,000 from A and $20,000 from B, then their deferrals from A would be subject to Roth catch-up while their deferrals from B would not.

[PainPA]

Also to confirm, it is a lookback calculation?

So an employee hired with a salary of $250,000 on 7/1/2025 made FICA wages of $125,000 in 2025.  They are not subject to the Mandatory Roth in 2026 because they did not make the limit?  regardless they will make $250,000 in 2026.  They will be subject to the mandatory roth in 2027.