There are important updates to retirement plan contribution rules that will go into effect on January 1, 2026. These changes are part of the Secure Act 2.0 provisions and may affect how employers and employees manage catch up retirement contributions.

Roth Catch Up Contribution Requirement

Beginning in 2026, employees who turn 50 or older during the year and who earned more than 150,000 dollars in Social Security wages during 2025 will be required to make any catch up contributions on a Roth basis if they choose to use this option. Pre tax catch up contributions will no longer be permitted for individuals who fall into this category.

In order for us to help apply this rule correctly, we will need your assistance in identifying which employees meet the wage threshold. Social Security wages can be found in Box 3 of an employee’s Form W-2.

What We Will Need From You

Please provide your employees’ 2025 Social Security wage information as soon as possible after January 1, 2026. You may upload this information through your standard submission method or send it to us directly, depending on your current process with Kemper 1st Choice Payroll.

You may also want to reach out to your payroll administrator to confirm that catch up contributions will not be deducted from an employee’s pay unless the employee has first reached the regular contribution limit for 2026, which is 24,500 dollars.

Please note that if your retirement plan does not currently allow Roth catch up contributions, eligible employees who exceeded the wage threshold in 2025 will not be able to make catch up contributions at all in 2026. If your plan needs to be updated to allow Roth catch up contributions, your plan provider can assist with the required amendment.

Catch Up Contribution Processing Update

Starting in 2026, catch up contributions will be allowed only after an employee has reached the full regular employee contribution limit. This change is intended to help administer the new rules more accurately and avoid year end corrections. Please coordinate with your payroll contact before your first payroll of the new year to make sure this process is in place.

We Are Here to Help

Contact us with questions and to learn about the latest developments.