By Forbes Staff,Kelly Phillips Erb

Copyright forbes

Checking up on your retirement plan may make sense now that we have more guidance related to the SECURE 2.0 Act.

Remember the SECURE 2.0 Act?

SECURE 2.0 Act—which I’ve noted before sounds like a sequel to an action movie—is a follow-up to 2019’s retirement-heavy legislation. The 2022 law built upon the 2019 SECURE Act and expanded retirement savings plans and eligibility by increasing catch-up contributions and allowing more part-time workers to qualify for retirement benefits. The law also established a process for employers to match student loan payments for purposes of making retirement contributions, included provisions for emergency withdrawals from retirement accounts (including those for domestic violence victims), and made significant changes to required minimum distributions (RMDs).

It feels like it’s been years since the law was passed (because it has been), but the Department of the Treasury and the IRS have finally issued final regulations on SECURE 2.0 Act provisions related to catch-up contributions. Catch-up contributions are exactly what they sound like: additional tax-favored contributions to retirement plans for employees who have reached age 50 (or more).

Under the SECTION 2.0 Act, employees who are aged 50 or older with previous year FICA wages of $145,000 or more (indexed for inflation) must treat catch-up contributions to section 401(k), 403(b), or governmental 457(b) plans as after-tax Roth contributions. The final regulations also provide guidance relating to increased catch-up contribution limits under the SECURE 2.0 Act for employees between the ages of 60-63 and employees in newly established SIMPLE plans.

(A SIMPLE plan—or Savings Incentive Match PLan for Employees—lets employees and employers contribute to retirement plans set up for employees. It’s a useful option for small businesses that don’t wish to officially sponsor a retirement plan.)

Final Regs Differ From Proposed Regs

In a nod to the idea that regulations aren’t final until they are really final, while these generally follow the proposed regulations, there are some changes. Notably, changes were made in response to comments received on the proposed rules, which were issued on January 10, 2025. (See? It pays to let the IRS know what you think about proposed regulations.)

Some Deadlines Are Pushed To 2027

The big change is timing. The final regulations make clear that provisions relating to the Roth catch-up requirement generally apply to contributions in taxable years beginning after December 31, 2026—meaning the 2017 tax year. (However, the final regulations provide a later date for certain governmental plans and plans maintained under a collective bargaining agreement.)

The final regulations note that plans can implement the Roth catch-up requirement for taxable years beginning before 2027 using a reasonable, good-faith interpretation of statutory provisions.

But since the mandatory part of the rule doesn’t kick in until 2027, plans may continue to permit catch-up contributions as before (pre-tax or Roth), even for those who exceed the income threshold. In other words, for now, the plans don’t have to change—but they can.

However, beginning in 2027, an additional catch-up contribution must be treated as a Roth if your income tops that threshold of $145,000.

(You can find the contribution limits, including catch-ups, for pension plans and other retirement-related items for tax year 2025 here.)

Traditional Plans Versus Roth Plans

Why does it matter?

With a traditional plan, contributions are typically pre-tax. You’re likely already familiar with how it works at the onset—you tick a box on a benefits form that allows you to set aside part of your earnings for retirement. From a tax standpoint, the benefit is two-fold: earnings don’t count towards your current year income (which reduces your potential tax bill) and it grows tax-deferred. When you reach retirement age, withdrawals are taxable as you take the money out—certain exceptions may apply, including money transferred directly to charity.

With a Roth plan, contributions aren’t initially tax-favored—you pay tax on the amount of the contribution upfront. But unlike a traditional plan, distributions are generally tax-free (so long as you follow the rules). That can be a plus if you’re paying tax now at a lower rate and hope to be in a higher tax bracket later. But if the opposite is true—you’re paying tax now at a higher rate and hope to be in a lower tax bracket later—it may not be so advantageous.

What that means is that you’ll want to be thoughtful about your retirement contributions if you’re considered a high-income taxpayer (even if you don’t agree with the IRS’ threshold for a high-income taxpayer). Fortunately, now you have more time to sort it out.

Originally, there was an administrative transition period for 2024 and 2025. During those two years, plans will not be penalized for noncompliance with the Roth catch-up requirement. The final regulations do not extend or modify the previously provided administrative transition period, which generally ends on December 31, 2025.

You can read the final regulations here.
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