Mandatory Roth Catch-Up Contributions FAQ

Beginning January 1, 2026, employees who earned more than $150,000 in Social Security (FICA) wages during the previous year can only make Roth (after-tax) catch-up contributions to their retirement plan.

Employees under that income threshold may continue to make pre-tax or Roth catch-up contributions as usual.

Only participants who:

• Are age 50 or older and eligible to make catch-up contributions, and
• Had more than $150,000 in FICA wages from the plan sponsor in the prior calendar year (this amount will be indexed for inflation).

If your plan does not currently include a Roth contribution option, affected high-earning employees will not be able to make catch-up contributions beginning in 2026.

To ensure these employees can continue saving, your plan must add a Roth feature by January 1, 2026.

Yes. PDC will automatically add the Roth feature to your plan unless you choose to opt out.

No formal plan amendment is required right now — the IRS is allowing plans to operate with the Roth feature in place starting in 2026, provided the plan amendment is adopted by December 31, 2026.

Here are a few simple steps to prepare:

1. Review 2025 compensation to identify employees likely to exceed the $150,000 threshold.
2. Notify affected employees who currently make catch-up contributions.
3. Coordinate with your payroll provider to add Roth deduction codes in advance.
4. Confirm with your recordkeeper that the Roth option will be active and properly integrated.
5. Educate employees on the difference between pre-tax and Roth contributions.

Roth contributions are made after taxes are withheld. The key difference from pre-tax contributions is that qualified distributions from a Roth account are tax-free, including earnings, as long as IRS requirements are met (generally, age 59½ and a five-year holding period).

Payroll systems will need to support separate Roth catch-up deduction codes for affected employees.

PDC and your recordkeeper will work together to help ensure your payroll feeds and contribution data are properly configured.

No. Only employees earning over $150,000 (indexed) are required to make Roth catch-up contributions.

Employees under that threshold may continue to choose between pre-tax or Roth for their catch-up contributions.

• Operational compliance: January 1, 2026
• Plan amendment deadline: December 31, 2026