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New Wage Threshold for Roth Catch-up Retirement Contributions
November 17, 2025
At-a-Glance
- On November 13, 2025, the IRS issued new guidance updating the Roth catch-up wage threshold to $150,000 based on FICA-eligible wages from 2025.
- Beginning January 1, 2026, eligible employees making catch-up contributions must contribute to a Roth account for their 401(k), 403(b), and government 457 retirement plans.
Summary
The SECURE 2.0 Act of 2022 introduced a requirement that employees meeting a FICA wage threshold of $150,000 in 2025 must make any retirement catch-up contributions to a Roth plan.
The FICA wage threshold is based on Social Security wages earned in the prior year from the employer sponsoring the retirement plan as reported in Box 3 of the employee’s Form W-2. This requirement takes effect on January 1, 2026.
For additional details, see IRS Notice 2025-67 issued on November 13, 2025, which also provides updated cost-of-living adjustments affecting retirement plans for 2026.
Next Steps
Paylocity continues to work on implementing a solution for clients to manage retirement plan compliance changes, and will update our solution according to the newly released requirements. Additional information can be found in Paylocity’s SECURE 2.0 resources.
Thank you for choosing Paylocity as your valued service partner. This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.
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