SECURE Act 2.0: What It Is and Why It Matters to Your Retirement Plan

If it feels like retirement plan rules change every time you finally get comfortable, you’re not wrong. The SECURE Act 2.0, is a sweeping set of updates designed to expand retirement savings while quietly adding a few compliance curveballs along the way.

One of the most impactful changes? How the catch-up contributions must be handled for certain higher-paid employees.

Let’s break it down.

What Is SECURE Act 2.0?

SECURE Act 2.0 is an expansion of the original SECURE Act. aimed at increasing retirement participation, boosting savings, and modernizing plan rules. It includes dozens of provisions rolling out several years with some that are optional and some mandatory.

One mandate provision takes effect January 1, 2026, and it directly affects catch-up contributions.

The Big Change: Roth-Only Catch-Up Contributions

Beginning in 2026, certain employees can no longer make pre-tax catch-up contributions. Instead, those contributions must be made on a Roth (post-tax) basis.

This rule applies if an employee meets all three of the following conditions:

• Is age 50 or older (yes, turning 50 during the year counts)

• Earned more than $145,000 in FICA-taxable wages in the prior calendar year

• Makes catch-up contributions to a 401(k), 403(b), or government 457(b) plan

If you miss one condition, the rule doesn’t apply. Hit all three? Roth is required.

What Exactly is a catch-up contribution?

Catch-up contributions allow employees age 50 and older to contribute above the standard IRS deferral limit. Historically, these contributions could be made pre-tax or Roth, depending on plan design and employee choice.

The SECURE Act 2.0 changes that flexibility for some employees.

Real- World Examples

Example 1: Roth Required

An employee earns $155,000 in 2025 and turns 50 in 2026. They make catch-up contributions to their 401(k) = Their 2026 catch-up contribution must be Roth (post-tax).

Example 2: Roth Not Required

An employee earns $140,000 in 2025 and turns 52 in 2026 = They may continue making pre-tax or Roth catch-up contributions, depending on plan design.

Example 3: Age Threshold Not Met

An employee earns $160,000 in 2025, but is 49 in 2026 = The Roth-only rule does not apply yet.

Why This Change Matters

This isn’t just a tax planning issue, it’s an operational one. Employers will need to ensure:

• Payroll systems correctly identify affected employees

• Contributions are coded and deposited accurately

• Plan documents and employee communications are aligned

Errors here can lead to compliance issues, corrections costs, and very uncomfortable conversations.

The Bottom Line

SECURE Act 2.0 isn’t optional reading. Even though the rule doesn’t take effect until 2026, preparation needs to start well before then, especially for employers with higher-paid, experienced workforces.

Understanding the rule now makes implementation later far less painful.

SECURE Act 2.0 is coming whether you’re ready or not.
Audax can help make sure you are. Let’s talk through what this means for your plan and how to stay compliant without the scramble.