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On September 15, 2025, the IRS provided the 401(k) world with what it had been anxiously awaiting: Final catch-up contribution regulations, reflecting changes made by SECURE Act 2.0. Specifically, the regulations address “super catch-up” contributions and the mandate that catch-up contributions for certain participants be made on a Roth after-tax basis.
The regulations take effect on November 17, 2025, with a delayed applicability/compliance date of January 1, 2027. For years before 2027, the IRS will deem plans that operate using a reasonable, good-faith interpretation of IRC Sec. 414(v) regarding catch-ups as compliant. Different effective dates may apply for collectively bargained, governmental, and Puerto Rico dual-qualified plans, with additional transition relief available in those cases.
Plan sponsors and financial advisors with 401(k) plans must understand the critical changes and compliance timing of the final catch-up regulations. Below are the key takeaways and action steps.
Roth Catch-Up Contributions
Beginning in 2026, for 401(k), 403(b), and governmental 457(b) plans that offer catch-up contributions, participants age 50 or older with prior-year FICA wages above $145,000 (indexed) must make any catch-up contributions as designated Roth contributions. That means such catch-up contributions will be taxable in the year contributed, and not taxable upon distribution, including earnings, provided the participant meets certain conditions.
Confirmations/Clarifications
The $145,000 wage threshold is determined per employer and uses Box 3 wages from Form W-2, not Medicare wages from Box 5.
Plans may elect to aggregate wages from different entities in certain situations.
This requirement does not apply to savings incentive match plans for employees (SIMPLE) or simplified employee pension (SEP) plans.
Deemed election: A plan may provide that a participant subject to the Roth catch-up requirement is deemed to have irrevocably designated any catch-up contributions as designated Roth contributions. The plan must treat these contributions as includible in gross income, maintain them in a separate Roth account, and the employee must have an effective opportunity to elect out of such treatment.
Where a participant makes pre-tax catch-up contributions that should have been designated Roth contributions, if the deemed election provision is in place, the plan can take advantage of two new correction options. Both methods must be applied consistently for similarly situated participants, and the general deadline for correction is by the end of the following year for the affected contribution, unless an earlier correction deadline applies (e.g., for excess deferrals).
Change the Form W-2 (allowed only if the employer has not already filed the form). This involves transferring the contributions and earnings to the designated Roth contribution account and reporting only the amount contributed as a designated Roth contribution on the participant’s Form W-2.
Roll over the contributions and earnings to the designated Roth contribution account. Report the full amount as an in-plan conversion on Form 1099-R. The participant includes the amount in taxable income.
For 403(b) plans, catch-up contributions made under the special “15-years of service” rule are not subject to the Roth catch-up mandate.
For governmental 457(b) plans, catch-up contributions made under the special “3-year” rule are not subject to the Roth catch-up mandate.
Super Catch-Up Contributions
SECURE 2.0 created optional "super catch-up" provisions for 401(k) and SIMPLE plan participants.
Small Employer Super Catch-Up Contributions for 2024 and Later Years
•SIMPLE Plans: Increases the annual deferral limit and the catch-up contribution at age 50 by 10% (i.e., $3,500 increased to $3,850 for 2025) in the case of an employer with 25 or fewer employees
•SIMPLE Plans: An employer with 26 to 100 employees would be permitted to provide the same higher deferral limits, but only if the employer either provides a 4% match or a 3% nonelective contribution.
Age 60-63 Super Catch-Up Contributions for 2025 and Later Years
•401(k) plans: Increases the standard age-50 catch-up limit to the greater of $10,000 or 50% more than the age-50 catch-up limit (i.e., $7,500 increased to $11,250 for 2025).
•SIMPLE Plans: Increases the standard age-50 catch-up limit to the greater of $5,000 or 50% more than the age-50 catch-up limit (i.e., $3,500 increased to $5,250 for 2025)
•Increased amounts are indexed for inflation after 2025
Confirmations/Clarifications
A SIMPLE plan participant cannot apply both the small employer super catch-up and the ages 60-63 super catch-up limits in the same year. (See RLC’s related Case of the Week on the topic.) However, a SIMPLE plan that provides for the small employer 10% increase may permit participants attaining age 60-63 to apply the 50% increase, if the result is a higher catch-up limit.
Key Plan Design and Operational Implications
Plans are not required to offer catch-up contributions (although nearly all plans do.) (1)
Plans are not required to have a designated Roth contribution feature (although nearly all plans do.) (2)
If a plan offers catch-up contributions and not designated Roth contributions, participants above the wage threshold cannot make catch-up contributions at all in that year. Those under the threshold could continue to make pre-tax catch-ups.
Plans may not mandate Roth catch-ups for all. Therefore, tracking who hits the wage threshold is mandatory unless all catch-ups are eliminated.
If a plan intends to implement a deemed Roth election, the terms of the plan document must reflect it.
Plan sponsors must confirm that payroll and recordkeeping providers can accurately administer both the Roth catch-up mandate and super catch-up limits—especially when tracking FICA wages, managing multiple entities, and reporting corrections.
Action Steps for Sponsors and Advisors
Review whether a plan offers a designated Roth feature, and if not, consider adopting one or be prepared to limit catch-up contributions for those with FICA wages over $145,000.
Audit payroll and recordkeeping systems to ensure they can track the $145,000 FICA wage threshold and super catch-up eligibility.
Update procedures and plan documents by the amendment deadline (generally December 31, 2026, with certain extensions) to reflect final regulation requirements.
Train HR, payroll, and advisory staff on changes for participant communications, especially regarding how Roth catch-up contributions affect taxable income and distributions.
Coordinate with service providers to implement corrections and ensure plan compliance.
Conclusion
These changes are highly technical and administratively complex. There are a lot of moving parts. For that reason, all procedural and plan amendments should be made in consultation with legal counsel and plan service partners.
On August 7, 2025, President Trump issued Executive Order (EO), “Democratizing Access to Alternative Assets for 401(k) Investors,” instructing the Department of Labor (DOL) to take action to clarify how fiduciaries of participant-directed defined contribution plans may include in the plan’s fund menu an asset allocation fund with alternative investments (e.g., private equity, real estate, etc.). The aim is to reduce regulatory and litigation risks to plan fiduciaries.
The EO instructs the DOL to review current guidance and take appropriate action to
Remove any regulatory stigma attached to the inclusion of alternative assets in an asset allocation fund (e.g., a target date or balanced fund); and
Relieve any litigation risk with respect to appropriately structured investments in alternative assets.
On June 10, 2025, Senator Tim Scott (R-SC), along with cosponsors, introduced the Strengthening Benefit Plans Act of 2025 (S. 2003). The bill would allow for the use of certain plan excesses from defined benefit/retiree health/retiree health accounts for the benefit of active employees. If enacted, the bill would
Permit transfers of excess health assets in pension plans; and
Allow surplus assets in a defined benefit plan to be transferred to defined contribution plans.
The bill was referred to the Senate Committee on Finance in June for debate and potential amendments.
The U.S. Senate confirmed Dan Aronowitz on September 19, 2025, as Assistant Secretary of Labor to lead the Employee Benefits Security Administration (EBSA) division of the Department of Labor (DOL). Aronowitz has extensive ERISA and fiduciary liability experience, having formerly been with Encore Fiduciary, a firm that specializes in fiduciary liability insurance.
Priorities that could affect plans
Expect regulatory clarity over litigation. Aronowitz is opposed to frivolous lawsuits against plan sponsors. Consequently, we anticipate the EBSA will issue more rules and guidance instead of relying on lawsuits to define fiduciary issues.
Investigations – Aronowitz wants to shorten and streamline EBSA investigations that, historically, have dragged on for years.
ESOPs – Aronowitz has shown strong support for employee stock ownership plans (ESOPs), including supporting clearer standards for stock valuations.
Fiduciary discretion – The new EBSA head likely will seek to shift back to giving plan fiduciaries more latitude if they follow prudent processes.
Other potential areas of focus
SECURE Act 2.0 implementation (auto-portability, pooled employer plans, reporting)
Alternative investments in 401(k)s (e.g., private equity, non-traditional assets).
Environmental Social Governance investing guidance (e.g., clarifying fiduciary responsibilities)
Fiduciary rule – New rulemaking expected by mid-2026.
Cybersecurity and participant protections – ongoing compliance emphasis.
What could this mean for plan sponsors and financial advisors?
Clear guidance
Fewer long EBSA investigations
An ESOP-friendly environment
Implementation updates for SECURE Act 2.0 provisions
Conclusion
With Aronowitz at the EBSA’s helm, the industry likely will see a collaborative and rule-based oversight style. For plan sponsors and financial advisors, this will, hopefully, lead to clearer compliance expectations.
The Department of Labor’s (DOL’s) recently released regulatory agenda has signaled many high-priority rulemaking and guidance initiatives from the Employee Benefits Security Administration (EBSA) that could substantially affect retirement plan compliance, fiduciary responsibilities, and participant protections. The agenda reflects the new administration’s focus on regulatory clarity, transparency, and realigning EBSA oversight.
Key Items in the Agenda
The table summarizes several consequential regulatory initiatives the EBSA has on its agenda, with expected timing and substance. A complete listing is available here.
| Topic | Stage/ Expected Timing | What’s Being Proposed/Changed |
| ESG/ “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights” | Final rule expected by May 2026 | The rule is expected to revise the President Biden-era ESG standard to ensure that investment decisions and the exercise of shareholder rights are based only on financial considerations relevant to risk and return, and not to advance social causes. |
| Fiduciary Rule (Investment Advice under ERISA) | Final rule expected by May 2026 | The DOL plans to revisit the fiduciary rule known as the “Retirement Security Rule,” to adjust how fiduciary investment advice is defined, and, potentially, roll back or replace parts of the existing standard to align more closely with the executive order on deregulation priorities. |
| SECURE 2.0 Reporting and Disclosure Requirements | Pre-and proposed rule stage | These include rules to implement disclosure/ reporting changes required under SECURE 2.0 (e.g., benefit plan reporting, lost and found databases, auto-portability, and possible changes to participant disclosures. |
| Auto-Portability of Retirement Accounts | Final rule expected by January 2026 | The auto-portability rules are meant to make it easier for workers to move small retirement balances when they change jobs, thereby reducing lost or abandoned accounts. |
| ESOP Adequate Consideration / Valuation Standards | Proposed rule expected by January 2026 | The regulation is expected to clarify what qualifies as “adequate consideration” when ESOPs buy or sell employer stock, including valuation methodologies. |
| Lost and Found Database (“Retirement Savings Lost and Found”) | Proposed rule expected by April 2026 | The EBSA is working to formalize rules around how the DOL collects information for its initiative to allow participants to locate retirement savings from past jobs. |
In all, the EBSA’s updated Spring 2025 regulatory agenda lists 20 items, which is ambitious and signals a significant regulatory realignment under new leadership. Plan sponsors and advisors should prepare now — assessing plan governance practices, contracts with service providers, disclosure practices, and fiduciary policies — in anticipation of upcoming rule changes.
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(1) Plan Sponsor Council of America, 67th Annual Survey, 2024
(2) Ibid.