Recordkeepers Brace for ‘Roth-Only’ Catch-Ups: What 2026 Rollout Might Look Like 

Starting in 2026, those 50 or older who earned at least $150,000 in the previous year must make any 401(k), 403(b) and 457(b) catch-up contributions as Roth (after-tax) contributions. 

Authorized by the SECURE 2.0 Act of 2022, the framework was finalized and the mechanics confirmed by the IRS this fall: The rule is based on prior-year FICA wages from the employer sponsoring the plan, and plans must be operationally ready for the 2026 plan year. Any 2026 catch-ups must be designated Roth; if the plan does not offer Roth contributions, those employees effectively cannot make catch-ups. 

With any Roth contributions, including catch-ups, participants pay taxes when the income is earned in exchange for tax-free growth and withdrawals down the road. While this boosts immediate tax revenue for the federal government, it is far from simple for plan recordkeeping firms that now face a new compliance landscape. 

The Handoff: Employer, Payroll, Recordkeeper 

According to recordkeepers, plan sponsors and their payroll providers hold the critical data, since recordkeepers generally do not track FICA wages, so they cannot independently determine who crosses the threshold. 

Sue Hardy, head of plan operations for fintech company 401Go, puts it bluntly: “Identifying and capturing the higher earners impacted by these changes will fall on the plan sponsor’s shoulders.”  

She adds that payroll partners, which also hold the responsibility for participant wage data, “have a great opportunity to shine” during the transition.  

Although the plan sponsor and payroll provider are responsible for the initial data capture, Ted Schmelzle, vice president of retirement plan services at The Standard, says that strong, consistent three-way communication between the payroll provider, the employer and the recordkeeper is essential for a successful rollout. 

“This change is multi-faceted and extremely complex. Multiple entities and systems are affected,” Schmelzle says. “Communication will be key.” 

As for if the industry has enough time to make the change, Schmelzle says, “We’re seeing questions from employers and payroll providers that indicate further time to implement would be welcome.” 

Meanwhile, Hardy says there is “absolutely” still time to prepare for this 2026 change if teams have not already begun—and warns that corrections after the fact are where things could get expensive.  

Will This Change Saver Behavior? 

Recordkeepers expect more participants will encounter Roth options in 2026 and will need education on the differences between Roth and pre-tax contributions. While Roth contributions can be especially beneficial early in a participant’s career—particularly if they anticipate higher earnings in the future—few participants actively choose this option. 

In 2025, almost 80% of plan sponsor (79.8%) respondents to the 2025 PLANSPONSOR Defined Contribution Survey offered participants the option of making Roth contributions. According to a separate survey by the Plan Sponsor Council of America, among participants with access, 21% chose to make Roth contributions. 

Jim Kais, head of group retirement at Equitable, says he expects a flood of Roth inflows among high earners by necessity due to the rule change, but he does not expect a broad “trickle-down” shift among others, absent stronger nudges and clearer guidance. He says inertia still rules much of participant behavior. 

Kais also notes that some sponsors could technically stop offering catch-up contributions rather than add Roth, but he would be “very surprised” to see that choice; most will keep the feature and comply. 

While the change might force many individuals to manage multiple accounts within their overall retirement savings, 401Go’s Hardy says that “retirement accounts are still a great option for individuals navigating multiple or separate accounts.” 

To Do List 

Technically, regulators have promised good-faith flexibility for the 2026 rollout, with full enforcement of the Roth changes set to start in 2027. Nonetheless, multiple sources recommend that plan sponsors and payroll teams make sure Roth contributions are allowed in both their plan documents and recordkeeping systems, and ensure any needed updates are made. 

Recordkeepers also recommend an early 2025 wage report (using W-2 Box 3 FICA wages) to identify affected employees; set up payroll codes to clearly separate Roth catch-ups from other contributions; and decide whether to require a separate catch-up election or apply Roth automatically for high earners. These choices should then be communicated clearly to employees, especially those newly affected by the rule. 

Recordkeepers say they plan to ensure their systems can handle Roth catch-up contributions, correctly identify eligible employees, provide clear participant education and have processes in place for handling any payroll errors. 

Recordkeepers note that the most significant—and most preventable—expense in managing complex changes is post-payroll clean-up, such as recharacterizations, lost earnings or make-up contributions. Submitting accurate data to the recordkeeper the first time allows plan sponsors to avoid these costly corrections.