SECURE 2.0 §603: why high earners must use Roth catch-up starting 2026
Section 603 of the SECURE 2.0 Act of 2022 mandates that catch-up contributions to workplace retirement plans (401(k), 403(b), governmental 457(b)) be made on a Roth basis for workers whose prior-year FICA wages exceeded $145,000. After a two-year IRS deferral, the rule took effect on 1 January 2026. The IRA catch-up is unaffected (still $1,000, taxpayer's choice). The mechanics are simple but the planning implications and plan-administration headaches are substantial.
The text of §603 and what it actually changed
Section 603 of the SECURE 2.0 Act of 2022 amended IRC §414(v) to add a new subsection §414(v)(7). The text effectively says: a catch-up contribution made to an applicable employer plan by an eligible participant whose prior-year FICA wages from the same employer exceeded $145,000 (indexed) must be designated Roth contributions. If the plan does not offer designated Roth contributions, the participant cannot make the catch-up at all.
Applicable employer plans for §603: 401(k) plans, 403(b) plans, and governmental 457(b) plans. The IRA catch-up under IRC §219(b)(5)(B) is not within scope.
Eligible participant: anyone age 50 or older during the plan year. The §603 rule applies on top of the existing catch-up regime, not as a replacement. So a 52-year-old high earner could previously make a $7,500 catch-up (2026 figure) on either a pre-tax or Roth basis, depending on their election and plan availability. From 2026 onward, the high-earner forced-Roth treatment applies if FICA wages cleared $145K in the prior year.
The new SECURE 2.0 §109 super catch-up for ages 60-63 of $11,250 (2026) follows the same §603 rule. A high-earning 61-year-old gets the $11,250 super catch-up but must receive it as Roth, not pre-tax.
The two-year deferral history
SECURE 2.0 §603 originally took effect 1 January 2024. In August 2023, the IRS published Notice 2023-62, deferring the effective date to 1 January 2026. The deferral was a recognition that plan administrators needed more time to update plan documents, payroll systems, and recordkeeper integrations.
Notice 2023-62 also flagged a drafting error in the original §603 text. The statutory language, read literally, would have eliminated all catch-up contributions for everyone (high earner or not) starting 2024. Congress and the IRS agreed this was not the intended effect, and the deferral period was used to allow legislative technical correction or interpretive guidance. As of mid-2026, the drafting error has been resolved interpretively: catch-up contributions remain available for non-high earners on a pre-tax or Roth basis (taxpayer's choice), and high earners must use Roth.
The two-year deferral was widely welcomed by plan sponsors. Most large employers had ample time to prepare; smaller plans and 403(b) plans run by school districts and non-profits often did not. As of mid-2026, the American Retirement Association estimated that approximately 5-10% of plans still had not added designated Roth contribution capability, blocking their high-earner participants from catch-up entirely.
The $145K threshold and the same-employer requirement
The $145,000 threshold uses prior-year FICA wages from the same employer. The threshold is indexed for inflation (currently still $145K for 2026 because the inflation-indexed amount has not yet cleared a higher round step; verify with the annual IRS notice for future years).
FICA wages are wages subject to Social Security tax under FICA. For 2024 (the lookback year for 2026 catch-up treatment), the Social Security wage base was $168,600. Wages above this base are not subject to Social Security tax but are subject to Medicare tax. The §603 threshold uses Social-Security-subject wages, so a worker who earned exactly $145,000 from a single employer in 2024 just cleared the threshold for 2026 catch-up treatment.
Same-employer requirement matters for people with multiple jobs or who changed jobs mid-year. A consultant who earned $80K from Employer A and $80K from Employer B in 2024 (total $160K) does NOT cross the $145K threshold for either employer, because §603 looks at single-employer FICA wages, not aggregate. The same person could participate in catch-up at either employer on either pre-tax or Roth basis in 2026.
By contrast, a senior employee who earned $200K from a single employer in 2024 hits the threshold and must make 2026 catch-up at that employer as Roth.
Self-employed workers do not have FICA wages (they have self-employment income with the §1402 SE tax). The §603 rule does not apply to self-employed retirement plans (Solo 401(k), SEP-IRA, SIMPLE IRA) regardless of net SE income level, per the IRS interpretive guidance in Notice 2023-62. This is a structural advantage for high-income self-employed workers: catch-up flexibility is preserved.
The financial implications for high earners
For a 55-year-old high earner in the 32% federal + 5% state bracket making the full $7,500 catch-up contribution in 2026, the forced-Roth treatment costs roughly $2,775 in current-year deduction value compared to pre-tax catch-up ($7,500 × 37% combined). For a 61-year-old making the $11,250 super catch-up, the cost is approximately $4,160.
The trade-off is the Roth dollars grow tax-free for the remaining work years and into retirement. For someone with 10 more years to retirement at 7% real returns, a $7,500 Roth contribution compounds to about $14,750 tax-free. The same $7,500 pre-tax contribution compounds to the same nominal $14,750, but is taxed at ordinary rates on withdrawal. At the 22% retirement bracket (most likely landing zone for a high-earning saver), after-tax value is $11,500. At the 32% retirement bracket (possible for very high savers), after-tax value is $10,030.
For a high earner who expects to be in the same or higher bracket in retirement, the §603 forced-Roth treatment is neutral to favorable. The compounding inside Roth more than compensates for the lost deduction. For a high earner who genuinely expects to be in a much lower bracket in retirement (unusual but possible), the §603 rule represents a modest tax-efficiency loss.
The biggest practical complaint from high earners has been the administrative friction: payroll systems showing surprising deduction patterns, year-end statements now needing to separate pre-tax and Roth catch-up, and the gradient between just-below-threshold (full pre-tax flexibility) and just-above-threshold (forced Roth). The actual tax-planning impact is modest. The administrative annoyance is the real story for most affected workers.
What to do if your plan does not offer Roth catch-up
The IRS guidance is straightforward and unforgiving: if your plan does not offer designated Roth contributions, you cannot make catch-up contributions in 2026 if you cleared the $145K FICA threshold. The plan must add Roth contribution capability for you to participate in catch-up.
Practical options if your plan blocks you:
- Lobby plan administrator to add Roth contribution option. This is a plan-document amendment, typically processed in 60-180 days. Most large recordkeepers (Fidelity, Vanguard, Schwab, Empower) have streamlined the amendment process.
- Maximise IRA catch-up. The IRA $1,000 catch-up is unaffected by §603 and is available on Roth or Traditional basis at your election (subject to standard income phase-outs).
- If you have access to an HSA, increase HSA contributions to absorb savings that would have gone to catch-up.
- Increase taxable brokerage saving to maintain overall retirement-savings rate.
For a 55+ worker maxing the regular elective deferral, the catch-up is the largest annual savings increment in a 401(k). Losing access to catch-up because the plan blocks Roth is a significant problem worth solving by amendment if at all possible.
FAQ
Who does SECURE 2.0 §603 affect?
Workers age 50 or older participating in 401(k), 403(b), or governmental 457(b) plans whose prior-year FICA wages from the same employer exceeded $145,000. Starting 1 January 2026, their workplace plan catch-up contributions must be designated Roth contributions.
Does §603 affect IRA catch-up contributions?
No. The IRA catch-up under IRC §219(b)(5)(B) remains $1,000 and remains taxpayer's choice between Roth and Traditional, subject to standard income phase-outs for direct Roth IRA contributions.
What if I had multiple employers in the lookback year?
The $145K threshold is per employer, not aggregate. A worker with $100K from Employer A and $100K from Employer B does not cross §603 for either employer's plan. A worker with $160K from a single employer does cross.
Does §603 apply to self-employed retirement plans?
No, per IRS Notice 2023-62 interpretive guidance. Solo 401(k), SEP-IRA, and SIMPLE IRA plans for self-employed individuals are outside the §603 scope. The self-employed catch-up flexibility is preserved regardless of net SE income.
What is the deferral history of §603?
Originally effective 1 January 2024. Deferred to 1 January 2026 by IRS Notice 2023-62 (August 2023). The deferral gave plan sponsors time to add designated Roth contribution capability and update systems.
Does §603 affect Roth IRA contributions?
No, in any way. The Roth IRA is a separate vehicle outside §603 scope. Standard Roth IRA contribution rules apply: $7,000 base, $1,000 catch-up at age 50+, subject to income phase-out ($150K-$165K single, $236K-$246K MFJ for 2026).
Not financial, tax, or legal advice. Figures sourced from SECURE 2.0 Act of 2022 §603, IRC §414(v) (catch-up contributions), IRC §414(v)(7) (high-earner Roth catch-up rule added by §603), IRS Notice 2023-62 (§603 deferral to 2026), IRC §219(b)(5)(B) (IRA catch-up), IRC §1402 (SE tax), IRS Notice 2024-80 (2026 limits and FICA wage base information), Social Security Administration wage-base announcements, American Retirement Association plan-adoption statistics. Tax laws change. Consult a fiduciary financial advisor, CPA, or qualified retirement planner.