The SECURE 2.0 Act introduces one of the most significant retirement‑plan shifts in over a decade, and its impact falls heavily on payroll, HRIS, and retirement plan administration. Beginning January 1, 2026, certain catch‑up contributions must be withheld on a Roth (after‑tax) basis for eligible high‑earning employees. This requirement, often referred to as the Roth Catch‑Up Mandate, affects operational workflows across payroll, benefits, HR, and technology teams.
According to internal guidance and presentations, high‑earning employees—those with prior‑year FICA wages above $145,000 (indexed, $150,000 referenced in updated materials for 2025)—must have all age‑50+ catch‑up contributions redirected to a Roth account when the rule takes effect.
While the rule may sound straightforward, it introduces a complex operational ripple effect that touches configuration, reporting, file feeds, eligibility tracking, deduction structures, and vendor integrations.
Key Areas Organizations Must Review Before 2026
1. Identification of Roth Catch‑Up Required Employees
Organizations need a reliable and repeatable way to determine which age‑50+ employees meet the SECURE 2.0 wage threshold. Internal references show this classification as Roth Catch‑Up Required (RCR) for employees exceeding prior‑year taxable wage limits.
This determination must be consistent, auditable, and available before the first payroll of 2026.
2. Retirement Plan Setup and Roth Eligibility
Secure 2.0 requires that eligible employees have a valid Roth contribution option. If the current retirement plan does not support Roth contributions, the plan must be amended. Several internal documents highlight the need for employers to confirm that plan vendors support Roth catch‑up reporting, coding, and eligibility tracking.
This review should occur well before the 2026 effective date to avoid compliance gaps.
3. Payroll Deduction Codes and Contribution Limits
The shift to Roth catch‑up contributions affects:
- Deduction categories
- Annual contribution limits
- Spillover rules
- Coordination between pre‑tax and Roth codes
- Tiered or combined deduction structures
As shown in internal SECURE 2.0 materials, contribution limits and catch‑up structures are already defined in backend limits, and misalignment can cause incorrect withholding.
Organizations must ensure all deduction codes align with 2026 Roth rules.
4. File Feeds, Vendor Integrations & Eligibility Indicators
Vendors may require changes to:
- File layouts
- Eligibility codes
- New Roth identifiers
- Contribution mapping
Internal documents note that some retirement carriers need updated reporting fields or additional eligibility indicators to facilitate the Roth catch‑up requirement.
Failure to update these feeds can lead to contribution rejections or inaccurate plan reporting.
5. Monitoring Long‑Term Part‑Time Eligibility
SECURE 2.0 expands eligibility for long‑term part‑time employees, allowing more workers to participate in retirement plans. This adds ongoing tracking requirements tied directly to hours worked across multiple years.
Eligibility changes must be consistently monitored and communicated to payroll and benefits systems.
6. Compliance Readiness Across Payroll & HR Systems
The largest risk identified across multiple internal resources is misconfiguration. Incorrect Roth or catch‑up mappings may not surface until:
- Mid‑year payroll audits
- Vendor file audits
- Annual retirement plan reporting
- Year‑end participant statements
By the time discrepancies are discovered, corrections may require manual adjustments, vendor coordination, and potentially reissued participant statements impacting employees and operational workload.
Why Early Preparation Matters
Secure 2.0 will require:
- Cross‑team coordination
- Vendor alignment
- Updated deduction and plan structures
- Clean prior‑year wage data
- Clear internal processes for identifying affected employees
Because payroll, retirement plans, and system configurations are deeply interconnected, even a single misalignment can create errors that propagate across pay periods, file feeds, and compliance reports.
Organizations should not wait until late 2025 to begin preparation. The earlier the review, the more time teams have to:
- Validate system readiness
- Confirm plan configuration
- Resolve discrepancies
- Test vendor file changes
- Communicate updates to employees
Proactive review now means smoother compliance later.
Need Support Preparing for Secure 2.0?
CORE HCM works directly with organizations and retirement plan vendors to prepare for the 2026 changes, including:
- Identifying Roth Catch‑Up Required employees
- Reviewing payroll and deduction structures
- Aligning retirement plan and vendor requirements
- Evaluating HRIS and payroll configuration readiness
· Supporting testing and validation
👉 Contact CORE HCM to ensure your organization is fully prepared for the Secure 2.0 Roth Catch‑Up Requirement before the 2026 deadline.