Secured Retirement Incorporated

Mandatory ROTH Catch-Up Contributions effective January 1, 2026
Starting January 1, 2026, a new IRS rule under the SECURE 2.0 Act will require certain retirement plan participants to make Roth (after-tax) catch-up contributions. Here's a breakdown of what this means and who it affects:

🔍 Who Is Affected?
• Participants aged 50 or older in 401(k), 403(b), or governmental 457(b) plans.
• Those who earned more than \$145,000 in F**A wages in the prior year (2025), indexed for inflation .

🧾 What’s Changing?
• Mandatory Roth Catch-Up Contributions: If you're a high-wage earner (above the threshold), any catch-up contributions you make must be Roth (after-tax), meaning:
o You pay taxes now.
o Your contributions grow tax-free.
o Withdrawals in retirement are tax-free .
• No Change to Contribution Limits: The catch-up contribution limit remains \$7,500 for 2025 (indexed annually). Ages 60–63 can contribute an additional \$3,750 .

⚠️ Important Considerations
• Plans Must Offer Roth Options: If your employer’s plan doesn’t support Roth contributions, high-wage earners won’t be able to make catch-up contributions at all .
• F**A vs. HCE Definition: The \$145,000 threshold is based on F**A wages, not the traditional Highly Compensated Employee (HCE) definition. This means some employees may unexpectedly fall into the Roth-only category .
• Impact on ADP Testing: Plans that fail nondiscrimination testing may no longer reclassify excess contributions as catch-up unless Roth is available .

✅ What You Should Do
• Employees:
o Review your 2025 income to see if you’ll exceed the threshold.
o Check if your plan offers Roth contributions.
o Consult a financial advisor to adjust your retirement strategy.
• Employers/Plan Sponsors:
o Ensure your plan allows Roth contributions.
o Update payroll and plan documents.
o Educate employees on the upcoming changes.

The Federal Government is offering several tax credit incentives for businesses to implement New qualified retirement plans. Statutes in the Secure 2.0 legislation signed in December 2022 could reduce the costs of creating a new employer sponsored plan by up to 100%! Annual administrative costs may be covered for up to 3 Years! If you have questions, Secured Retirement Incorporated has the answers.
Let us explain the new opportunities for Employers.

2023 Retirement Plan COLA Increases announced by IRS.
Follow link to read Notice 2022-55 Increased opportunities for qualified plan participants to maximize their retirement plan contributions.

401(k) limit increases to $22,500 for 2023, IRA limit rises to $6,500 | Internal Revenue Service IR-2022-188, October 21, 2022 — The IRS announced today that the amount individuals can contribute to their 401(k) plans in 2023 has increased to $22,500, up from $20,500 for 2022. The IRS today also issued technical guidance regarding all of the cost of living adjustments