Beginning January 1, 2026, federal law requires certain employees who make catch-up contributions to a 401(k) plan to make those catch-up contributions as Roth contributions.
Each year, employers may need to confirm prior-year Social Security wages for employees who are eligible to make catch-up contributions. The Participants Eligible for Catch-Up Contributions report in your Ubiquity account is available to complete this process.
Who is affected?
High-paid individuals (HPIs) who are eligible to make catch-up contributions may be affected by the Roth catch-up requirement.
Who must make catch-up contributions as Roth?
For 2026, this requirement applies to Highly Paid Individuals (HPIs) who:
- Will be age 50 or older by December 31, 2026, and are eligible to make catch-up contributions; and
- Earned more than $150,000 in Social Security wages from the employer sponsoring the plan during 2025.
If both conditions apply, the individual is considered an HPI, and their 2026 catch-up contributions must be made as Roth contributions.
What wages are used for the $150,000 threshold?
The rule generally uses the employee's Social Security wages from the employer sponsoring the plan during the previous calendar year.
For most employees, this amount can be found in Box 3 of Form W-2.
It is not based on household income, adjusted gross income, a spouse's income, or the employee's current-year salary.
What if the employee earned exactly $150,000?
They are not subject to the mandatory Roth catch-up requirement for 2026.
The employee's applicable 2025 wages must be more than $150,000.
Will the wage threshold always be $150,000?
No. The IRS adjusts the threshold for inflation.
The applicable threshold should be reviewed each year. The report will identify the threshold applicable to the year being reviewed.
Is this the same as being a Highly Compensated Employee (HCE)?
No. These are separate rules.
An employee's HCE status does not determine whether their catch-up contributions must be Roth.
What do I need to do?
Do I need to complete this process every year?
The Roth catch-up determination is based on an employee's wages from the previous calendar year, so the determination may need to be completed each year for catch-up-eligible employees.
For example:
- 2026 status is based on applicable 2025 wages.
- 2027 status is based on applicable 2026 wages.
- The applicable IRS wage threshold may also change from year to year.
The Participants Eligible for Catch-Up Contributions report will be available annually to support this process.
How will I update this on the website?
Sign in to your Ubiquity account and open the Participants Eligible for Catch-Up Contributions report.
For each employee requiring an answer:
- Locate the employee's Form W-2 for the prior calendar year.
- Find the employee's Social Security wages in Box 3.
- Answer Yes or No to whether those wages were more than the threshold shown in the report.
- Complete the question for every employee requiring an answer.
- If an employee is over the threshold, make sure your payroll system can process that employee's catch-up contributions as Roth.
Your Yes or No selections save automatically.
Where can I find the report?
The Participants Eligible for Catch-Up Contributions report is available from the Reports page in your Ubiquity account.
You may also see an action item on your Employer Dashboard when information needs to be completed.
Why am I only being asked about certain employees?
The report identifies employees who may be eligible to make catch-up contributions.
You do not need to review your entire workforce. Complete the wage question for each employee shown as requiring an answer.
Do I enter the employee's actual wages?
No.
You only need to answer whether the employee's applicable prior-year Social Security wages were over the threshold shown in the report.
What do I select if the employee is over the threshold?
Select Yes.
The employee's catch-up contributions for that year must be Roth.
You should also make sure your payroll system is set up to process the employee's catch-up contributions as Roth rather than pre-tax.
What do I select if the employee is at or below the threshold?
Select No.
The employee is not subject to the mandatory Roth catch-up requirement for that year based on this rule.
What if the employee did not have W-2 Social Security wages from us in the prior year?
An employee with no applicable Social Security wages from the employer sponsoring the plan during the prior year generally is not subject to the mandatory Roth catch-up requirement for the current year.
Wages from an unrelated previous employer generally are not included.
What if another catch-up-eligible employee is added later?
If an employee meets the report criteria, they will appear on the Participants Eligible for Catch-Up Contributions report.
If prior-year wage information is required, the employer will need to complete the applicable Yes or No question.
What does the Roth requirement mean?
Does this mean all of the employee's 401(k) contributions must be Roth?
No.
Only the HPI employee's catch-up contributions are required to be Roth under this rule.
An affected employee may generally continue making regular 401(k) contributions on a pre-tax basis.
Are employees required to make catch-up contributions?
No.
Catch-up contributions are optional. The rule only determines how an affected employee's catch-up contributions must be taxed if they choose to make them.
Can an affected employee choose pre-tax catch-up contributions instead?
No.
If an employee is subject to the mandatory Roth catch-up requirement, their catch-up contributions must be Roth.
The employee can choose not to make catch-up contributions.
Can employees below the wage threshold still make Roth catch-up contributions?
Yes, if Roth contributions are available under the plan.
The rule determines who must use Roth for catch-up contributions. It does not prevent other eligible employees from choosing Roth.
Special Situations
What if the employee is newly hired?
Wages from an unrelated previous employer generally do not count.
For example, an employee hired in 2026 who earned more than $150,000 from an unrelated employer in 2025 but had no 2025 Social Security wages from the employer sponsoring the new plan generally would not be subject to mandatory Roth catch-up contributions under the new employer's plan for 2026.
What about an owner or partner who doesn't receive W-2 wages?
The Roth catch-up wage threshold is generally based on Social Security wages from the employer sponsoring the plan. If an owner or partner does not receive W-2 Social Security wages, self-employment or partnership income is generally not treated as Social Security wages for this purpose.
If you are unsure what compensation applies based on how the owner or partner is paid or how their compensation is reported, discuss this with your CPA or tax advisor.
What if an employee works for multiple related companies?
Special rules may apply when an employee receives wages from multiple related companies. Depending on the relationship between the companies and how the plan and payroll are structured, wages from related employers may need to be combined when determining whether the employee exceeds the Roth catch-up wage threshold.
Wages from unrelated employers are generally not combined.
What if an employee's W-2 is corrected?
If a corrected W-2 changes the employee's applicable prior-year Social Security wages from above the threshold to at or below it—or vice versa—the employee's Roth catch-up status may also change.
The wage determination should be updated to reflect the corrected information.
What if my plan does not offer Roth?
Why does my plan need Roth?
If an employee is subject to the mandatory Roth catch-up requirement, the plan must be able to accept Roth contributions for that employee to make catch-up contributions.
Without a Roth source, an affected employee cannot make catch-up contributions.
Does adding Roth require employees to make Roth contributions?
No.
Adding Roth makes Roth contributions available under the plan. It does not require employees to change their existing contribution elections.
Can we simply prevent affected employees from making catch-up contributions?
Generally, a plan cannot selectively allow some catch-up-eligible employees to make catch-up contributions while preventing others from doing so solely because they are subject to the Roth requirement.
What do I need to do with payroll?
Does completing the report automatically update my payroll system?
No.
The report determines whether an employee is subject to the Roth catch-up requirement. It does not automatically change the employee's setup in your payroll system.
If an employee is over the applicable threshold, make sure your payroll system will process that employee's catch-up contributions as Roth rather than pre-tax.
What happens if a required Roth catch-up contribution is processed as pre-tax?
This creates an operational error that must be corrected.
The available correction method depends on when the error is identified. Correction may involve changing the tax reporting and contribution source or moving the affected contribution, adjusted for applicable earnings, to Roth.
What about employees ages 60 through 63?
Employees ages 60 through 63 may qualify for a higher catch-up contribution limit. This is separate from the Roth requirement.
Whether those catch-up contributions must be Roth still depends on the employee's applicable prior-year Social Security wages.