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Retirement · Updated July 11, 2026

SECURE 2.0 §603 Mandatory Roth Catch-Up in 2026: IRC §414(v)(7), the $150,000 FICA Wage Threshold, and the First-Year Enforcement Playbook

The rule that redirected every high-earner catch-up contribution into Roth on January 1, 2026 — the exact $150,000 prior-year FICA wage test, what happens if your plan lacks a Roth source, the mid-year job change loophole, and three worked case studies at $155K, $220K, and $580K wages.

CalcLeap Editorial Published July 11, 2026 18 min read How we research

The SECURE 2.0 Act of 2022 shipped 92 separate retirement-plan provisions, of which the most consequential for high earners is §603 — the mandatory-Roth catch-up rule now codified at Internal Revenue Code §414(v)(7).[1] The rule says something narrow but sharp: starting January 1, 2026, any age-50 catch-up ($8,000 for 2026) or age-60–63 super catch-up ($11,250 for 2026) made by a 401(k), 403(b), or governmental 457(b) participant whose prior-year FICA wages from the same employer exceeded $150,000 must be contributed as a designated Roth (after-tax) amount rather than pretax.[2] The elective deferral itself — the $24,500 base for 2026 — remains available as pretax at the participant's option regardless of wage level.[3] The rule targets exactly one thing: the marginal catch-up dollars that near-retirement high-income participants use to accelerate savings in their final working decade.

What makes 2026 the load-bearing year is not the statute — SECURE 2.0 §603 was enacted December 29, 2022 — but the IRS Notice 2023-62 two-year administrative-transition relief that expired December 31, 2025.[4] Payroll providers, plan sponsors, and recordkeepers had two years of grace to update their systems: hard-blocking pretax catch-up elections for wage-flagged participants, adding designated Roth sources to plans that lacked them, and reprogramming every enrollment interface to detect and enforce the $150,000 threshold. As of January 1, 2026, that grace period is over. Errors are now operational failures under the Employee Plans Compliance Resolution System (EPCRS) rather than self-correctable under Notice 2023-62's transition safe harbor.[5]

This guide walks the 2026 §603 rule end-to-end: the exact IRC §414(v)(7) mechanic, the FICA-wage threshold measurement (which uses Form W-2 Box 3, not compensation), what happens at a plan that never added a designated Roth source, the mid-year job change window that unwinds the rule for one calendar year, the interaction with the mega backdoor Roth and other SECURE 2.0 provisions, three worked case studies at $155K / $220K / $580K wages, and the eight-item checklist to verify your 2026 election is compliant. Model the numbers as you read using the CalcLeap 401(k) calculator, which handles the 2026 IRS Notice 2025-67 catch-up limits and the §603 Roth requirement.

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1. What SECURE 2.0 §603 actually does

SECURE 2.0 §603 amended IRC §414(v) — the general catch-up-contributions statute — by adding subsection (v)(7). The new subsection reads, in plain language: for any participant whose Form W-2 Box 3 (Social Security) wages from the employer sponsoring the plan exceeded an indexed dollar threshold in the prior calendar year, any catch-up contribution made under §414(v) in the current year must be a designated Roth contribution under §402A. The threshold is $145,000 for the plan year for which §603 is first applied (measured against prior-year wages), indexed for cost-of-living adjustments in $5,000 increments under §414(v)(7)(A)(iii).[2] Because 2024 CPI adjustments moved the number to $150,000 for 2026-catch-up-eligibility purposes, and because IRS Notice 2023-62 delayed the effective date to 2026, the operational threshold every payroll system runs against for 2026 elections is $150,000 of prior-year FICA wages.[4]

Three things the rule does not do are as important as what it does. First, it does not touch the $24,500 base elective deferral under IRC §402(g)(1) — a $200,000 earner can still elect that full amount as pretax if the plan permits. Second, it does not touch employer contributions (safe harbor match, discretionary match, profit sharing, nonelective) — those are always pretax at the recordkeeper's default, or Roth if the plan permits and the participant elects under IRC §402A(c)(4)(D) (added by SECURE 2.0 §604).[6] Third, it does not touch after-tax employee contributions used in the mega backdoor Roth strategy — those are already after-tax by definition and pass through §603 with zero friction.

The rule's narrowness is deliberate. Congress's stated rationale in the JCT technical explanation was revenue neutrality — the §603 Roth requirement collects immediate current-year tax revenue on catch-up dollars that would otherwise have been deferred for 15–25 years, and JCT scored the provision at approximately $9.4 billion of 2023–2032 revenue over the 10-year budget window.[7] The pretax deferral is preserved on base deferrals because taxing $24,500 across 40 million participants would have generated political backlash without materially improving the score.

The rule is participant-level, not plan-level

Every §603 determination happens per participant per prior year. A plan can have 10,000 participants, 3,000 of whom are §603-covered and 7,000 of whom are not; the recordkeeper enforces the Roth requirement individually. This is why every 2026 plan enrollment interface now includes a prior-year-wage lookup that flags each participant's status at the moment of election — pretax catch-up is either allowed or blocked based on that one number.

2. The $150,000 FICA wage threshold measurement

The threshold is not "compensation" as broadly defined under §415(c)(3) or §414(s). It is specifically FICA wages under IRC §3121(a) — Social Security wages, reported on Form W-2 Box 3 — measured for the calendar year immediately preceding the plan year of the catch-up.[8] For 2026 catch-up eligibility, the number is your 2025 W-2 Box 3 amount from the plan sponsor. Not Box 1 (federal taxable wages, which excludes pretax 401(k) deferrals). Not Box 5 (Medicare wages, which has no cap). Box 3 specifically — the wage base for Social Security tax, which was capped at $176,100 for 2025.[9]

The choice of Box 3 has several administratively convenient consequences. First, the plan sponsor already has this number for every participant — payroll systems are required to report Box 3 wages to the IRS, so no new data collection is required. Second, because Box 3 is capped at the annual Social Security wage base, the measurement is a bounded number a payroll system can validate in constant time. Third, the participant's own pretax 401(k) contributions are included in Box 3 (pretax 401(k) deferrals reduce Box 1 but not Box 3 for Social Security tax purposes) — so a high earner cannot game the threshold by ramping their pretax deferral.

2025 gross wages2025 pretax 401(k) deferral2025 Box 1 wages2025 Box 3 wages2026 §603 status
$140,000$0$140,000$140,000NOT covered
$155,000$23,500$131,500$155,000Covered
$175,000$23,500$151,500$175,000Covered
$220,000$30,000 (Roth)$220,000$176,100 (capped)Covered
$580,000$23,500$556,500$176,100 (capped)Covered
$149,000$0$149,000$149,000NOT covered

Notice two boundary effects in the table above. First, the 2025 Social Security wage base cap of $176,100 does NOT protect a high earner from §603 — the FICA wage base cap limits how much Social Security tax you pay, not what number goes on your W-2 Box 3. Box 3 is capped at the wage base as a matter of how the form is drafted, but the §603 threshold measurement (which uses Box 3) will still register you as above $150,000. Second, Roth 401(k) deferrals don't reduce Box 3 wages — because Roth deferrals are after-tax, they leave Box 1 unchanged too, so a Roth-electing participant's Box 3 and Box 1 wages will match up to the wage base cap.

The threshold is measured per employer. A participant who earned $150,001 combined from Employer A ($90,000) and Employer B ($60,001) is NOT §603-covered at either employer — the threshold measurement is Box 3 wages from each specific employer, not aggregate wages across all employers. This has practical consequences for gig workers with multiple W-2 sources: a participant who never crosses $150,000 at any single employer is exempt from §603 at every employer, even if their aggregate wages exceed $500,000. See the mid-year job change discussion in Section 5 for the closely related first-year-at-new-employer exemption.

3. Which catch-ups §603 covers (and which it doesn't)

§603 covers the entire universe of §414(v) catch-up contributions and nothing else. That universe includes:

  • The age-50 catch-up under §414(v)(2)(B)(i), $8,000 for 2026 per IRS Notice 2025-67, available to any participant who has attained age 50 by December 31 of the plan year.[3]
  • The age-60–63 super catch-up under §414(v)(2)(E)(i), added by SECURE 2.0 §109 and set at the greater of $10,000 or 150% of the regular §414(v)(2)(B)(i) age-50 catch-up limit, which computes to $11,250 for 2026 (150% × $7,500 base) or $10,000 whichever is greater, so $11,250. Available only in the calendar years in which the participant attains age 60, 61, 62, or 63.[10]
  • The SIMPLE IRA catch-up under §414(v)(2)(B)(ii), $3,850 for 2026 (subject to §414(v)(2)(E)(ii) enhancement for SIMPLE plans of small employers), which is technically covered by §603 but only if the SIMPLE IRA offers a designated Roth option (see Section 8).
  • The 403(b) 15-year catch-up under §402(g)(7) is a separate provision that is NOT a §414(v) catch-up and is NOT subject to §603. It remains available as pretax at the participant's option.

Not covered by §603:

  • The base $24,500 elective deferral under §402(g)(1).
  • Employer contributions of any type — match, safe harbor match, profit sharing, discretionary match, nonelective, or QNEC.
  • After-tax employee contributions under §401(m) (the mega backdoor Roth bucket).
  • IRA contributions under §408 — the $7,500 base and $1,100 age-50 catch-up (2026) remain freely available as Traditional or Roth per participant election.[3]
  • Rollover contributions and repayment of qualified plan loans.
  • The special 457(b) "last three years" catch-up under §457(b)(3), which is a plan-specific catch-up but not a §414(v) catch-up.

The stacking mechanic still works, but now with a Roth constraint

A §603-covered participant at a plan with both Roth deferral and an after-tax mega backdoor source can still accumulate up to $83,250 of Roth in a single 2026 tax year at age 62: $24,500 base deferral (optionally Roth) + $11,250 super catch-up (mandatory Roth under §603) + $47,500 mega backdoor Roth (via §402A(c)(4)(E) in-plan rollover). See our mega backdoor Roth 2026 guide for the full stacking math and the plan-feature-availability checklist.

4. What happens when a plan lacks a Roth source

IRC §414(v)(7)(B) — the deemed-election safe harbor — creates a stark all-or-nothing rule for plans without designated Roth deferral sources. If a plan does not permit designated Roth contributions under §402A, then §603-covered high-wage participants at that plan cannot make ANY catch-up contribution at all. The provision reads: "If a plan does not permit the making of catch-up contributions in the form of designated Roth contributions, no catch-up contributions may be made under such plan." A pretax-only plan effectively eliminates the $8,000 or $11,250 catch-up for its entire HCE population overnight.[2]

At year-end 2023, roughly 82% of §401(k) plans (weighted by participant) offered a designated Roth source per Plan Sponsor Council of America's 66th Annual Survey — meaning about 18% of plans faced a forced choice: add a Roth source during the 2024–2025 transition window or lose catch-up capacity for their §603-covered participants starting 2026.[11] Governmental §457(b) plans were in worse shape: roughly 55% offered Roth at year-end 2023, with the remaining 45% facing the same forced choice or catch-up elimination. Public-sector employers, in particular, faced substantial administrative and legislative hurdles to adding Roth sources, and industry surveys during 2024 flagged approximately 8% of §457(b) plans as unlikely to add Roth in time.[12]

Adding a designated Roth source to an existing plan is not administratively trivial. The plan document requires amendment (typically executed at the next plan restatement cycle or via interim amendment), the recordkeeper must add Roth subaccount infrastructure, the payroll provider must be reprogrammed to accept a separate Roth deferral election in parallel with pretax, and participant communications must be updated. Total cost to a mid-sized plan sponsor: typically $3,000–$8,000 in TPA and recordkeeper fees plus internal HR administrative time. For plans that did not act during 2024–2025, the 2026 outcome is either a scramble to add Roth mid-year or a de facto elimination of catch-up for HCEs.

5. The IRS Notice 2023-62 transition relief and why 2026 is D-day

SECURE 2.0 §603 was enacted December 29, 2022 with a statutory effective date of January 1, 2024 — meaning the mandatory Roth catch-up was originally scheduled to hit payroll systems 12 months after passage. Industry response was immediate and unanimous: the American Retirement Association, the Society for Human Resource Management, and the American Benefits Council all filed public comments during Q1–Q2 2023 warning that payroll providers and recordkeepers could not update their systems on that timeline.[13]

On August 25, 2023, the IRS issued Notice 2023-62 — the "administrative transition period" notice — providing two forms of relief. First, §III.A permitted plans to continue treating §603-covered participants' catch-up contributions as pretax during calendar years 2024 and 2025 without treating the plan as failing to satisfy §414(v). Second, §III.B provided self-correction pathways for plans that had already begun implementation and processed some Roth-eligible contributions as pretax by mistake — the plan could either recharacterize the pretax contribution as Roth (with corresponding W-2 Box 1 adjustment) or refund the contribution under Rev. Proc. 2021-30 §6.06.[4]

Notice 2023-62 was silent on 2026. The transition relief expired by its own terms on December 31, 2025, and no successor notice extending the relief has been issued as of July 2026.[14] That silence is the signal: 2026 is the first calendar year in which §603 is enforced on payroll systems, and errors are now treated as operational plan failures under the standard EPCRS process rather than self-correctable under Notice 2023-62's transition safe harbor.

Payroll providers went hard-block in Q4 2025

ADP, Paychex, Workday, Gusto, Rippling, and every major payroll platform pushed engine updates during October–December 2025 that hard-block pretax catch-up elections for participants flagged as §603-covered by their 2025 W-2 Box 3 wages. The enrollment interface at recordkeepers (Fidelity NetBenefits, Vanguard Personal Investor, Empower, Schwab Workplace, T. Rowe Price, Principal) similarly refuses to accept a "pretax" catch-up election for flagged participants — the pretax option is greyed out or hidden entirely, replaced with a single "Roth catch-up" option. This is the practical operational shape of §603 enforcement in 2026.

6. The mid-year job change window

The §603 threshold is measured per employer, per prior year. A participant who earns $200,000 at Employer A in 2025 and then moves to Employer B in January 2026 is NOT §603-covered at Employer B for the 2026 catch-up — because their 2025 FICA wages from Employer B were $0. The prior-year threshold measurement is against Employer B's Box 3 wages specifically, which do not exist because the participant was not employed by Employer B in 2025.[2]

This creates a legitimate one-year planning arbitrage: a high-income mid-career employee changing jobs in January 2026 escapes §603 at the new employer for all of 2026 even though their overall lifestyle income clearly exceeds $150,000. In 2027, however, the participant's 2026 Box 3 wages at Employer B will be measured, and if they exceeded $150,000 (indexed for 2027), §603 applies at Employer B starting January 1, 2027. The window is one calendar year — the first year at a new employer only.

Two adjacent scenarios follow the same logic:

  • Self-employment to W-2 transition. A sole proprietor who earned $300,000 of Schedule C income in 2025 and takes a W-2 role at Employer C in 2026 has $0 of prior-year Box 3 wages from Employer C. §603 does not apply at Employer C for 2026 catch-up. Note the sole proprietor's own Solo 401(k) is a separate plan with a separate participant record — see Section 8 for the sole-proprietor treatment.
  • Return-from-leave. A participant who took an unpaid leave of absence for all of 2025 (parental leave, sabbatical, medical) with $0 of 2025 W-2 wages from the plan sponsor is NOT §603-covered for 2026 catch-up regardless of pre-leave or post-leave income. The measurement is unforgivingly literal: Box 3 = $0, threshold not crossed.

The arbitrage is not a loophole — it is the statute working as written

The per-employer, per-prior-year measurement is a deliberate design choice. Congress could have written §603 to apply based on aggregate current-year wages, but instead chose the more administratively tractable prior-year, per-employer measurement. Recordkeepers do not aggregate wage histories across employers, and requiring that would have doubled the compliance burden. The mid-year window is a byproduct of that design, and IRS guidance to date has not indicated any intent to close it.

7. Interaction with other SECURE 2.0 and pre-existing rules

Mega backdoor Roth (§402A(c)(4)(E))

§603 and the mega backdoor Roth are administratively independent. The mega backdoor uses the after-tax employee contribution source under §401(m) and converts it to Roth via in-plan rollover under §402A(c)(4)(E); §603 targets the §414(v) catch-up specifically. A participant executing both simultaneously in 2026 sees the catch-up mandatorily Roth-directed and the mega backdoor voluntarily Roth-converted — both funnel into the Roth 401(k) subaccount but through separate mechanics. See our mega backdoor Roth 2026 guide for the full stacking math.

SECURE 2.0 §604 Roth employer contribution option

§604 added IRC §402A(c)(4)(D), permitting plans to allow the participant to elect that employer matching or nonelective contributions be treated as Roth. This is optional at both the plan level (the plan document must permit it) and the participant level (the participant elects it). §603 does not force the §604 election — a plan without a §604 election still delivers pretax employer contributions to §603-covered participants. A plan with §604 electively lets the participant convert those employer contributions to Roth, adding to the participant's Roth accumulation at the cost of immediate current-year tax on the employer contribution.[6]

SECURE 2.0 §325 lifetime RMD elimination for Roth 401(k)

SECURE 2.0 §325, effective for 2024 and later plan years, eliminated the requirement that designated Roth accounts under §402A be subject to lifetime required minimum distributions (RMDs) under §401(a)(9)(A). This aligns Roth 401(k) treatment with Roth IRA treatment for the participant's lifetime.[15] §603-covered participants who accumulate large Roth 401(k) balances via mandatory Roth catch-up benefit from this simplification — post-2024 Roth 401(k) balances no longer trigger RMDs at the §401(a)(9)(C) age (73 for participants born 1951–1959, 75 for those born 1960 or later per SECURE 2.0 §107). The Roth 401(k) balance can compound tax-free indefinitely during the participant's lifetime.

§401(a)(17) compensation cap and §415(c) annual additions ceiling

Neither cap changes because of §603. The catch-up sits outside the §415(c) $72,000 annual additions ceiling under IRC §414(v)(3)(A), so the mandatory Roth catch-up does not consume mega backdoor Roth headroom. The §401(a)(17) $360,000 compensation cap continues to limit percentage-of-pay employer contributions and is unaffected by whether the catch-up is pretax or Roth.[3]

8. Three worked case studies at $155K, $220K, and $580K wages

Case 1: Rohan, senior engineering manager, 2025 Box 3 wages $155,000

Setup. Rohan is 51, single, employed at the same firm since 2018. 2025 W-2 Box 3 wages: $155,000. Federal marginal bracket for 2026: 32% (single, $196,300+ taxable income). State: California (9.3% marginal, plus 1% mental health surcharge above $1M). Plan is a mid-sized 401(k) at Fidelity with both pretax and Roth deferral sources and no after-tax source (no mega backdoor).

§603 status: Box 3 of $155,000 exceeds the $150,000 threshold. Covered.

2026 base elective deferral: $24,500. Rohan elects 100% pretax (his choice — §603 does not touch this bucket). Current-year federal + state savings: $24,500 × (0.32 + 0.093) = $10,119.

2026 age-50 catch-up: $8,000. §603 forces this to Roth. No current-year federal or state deduction. Rohan pays $8,000 × (0.32 + 0.093) = $3,304 of tax on the catch-up dollars in 2026 versus a hypothetical pretax election.

Long-run tradeoff. If Rohan's retirement bracket is 24% federal + 6% state (Nevada residency at retirement), then over a 20-year horizon at 6.5% real return, the Roth catch-up grows to $8,000 × 1.065^20 = $28,178 which is fully tax-free at qualified distribution. The pretax alternative would grow to the same $28,178 pretax which produces $28,178 × (1 − 0.24 − 0.06) = $19,725 after-tax at retirement. The Roth position wins by $8,453 in the base case — well outweighing the $3,304 of current-year tax cost. §603 hurts Rohan by roughly zero and helps him by ~$5,000 on a present-value basis.

Total 2026 election: $24,500 pretax + $8,000 Roth catch-up = $32,500 total elective. Roth accumulation this year: $8,000.

Case 2: Marcus, VP of engineering, 2025 Box 3 wages $220,000 (uncapped, no wage-base ceiling effect — Marcus's Box 3 is capped at the $176,100 wage base for 2025)

Setup. Marcus is 62, married filing jointly, employed at the same firm since 2015. 2025 W-2 Box 1 wages: $220,000. 2025 W-2 Box 3 wages: $176,100 (capped at 2025 Social Security wage base). Federal marginal bracket for 2026: 24% (MFJ, $206,700–$394,600 taxable income after $30,000 standard deduction and $24,500 pretax deferral). State: Virginia (5.75% marginal). Plan is Fidelity's Corporate PS Plan platform with after-tax source, daily in-plan Roth rollovers, and §604 election available.

§603 status: Box 3 of $176,100 exceeds the $150,000 threshold. Covered.

Age-60–63 status: Age 62, so eligible for the §414(v)(2)(E)(i) super catch-up of $11,250.

2026 base elective deferral: $24,500. Marcus elects $16,500 pretax + $8,000 Roth (voluntary Roth on portion of the base — his optimization).

2026 super catch-up: $11,250. §603 forces this to Roth. No current-year federal or state deduction. Immediate tax cost: $11,250 × (0.24 + 0.0575) = $3,347.

Mega backdoor Roth: Marcus's plan supports it. Employer 6% match on §401(a)(17) $360,000 compensation cap = $21,600. Mega backdoor capacity: $72,000 − $24,500 − $21,600 = $25,900. Daily conversion → zero taxable earnings drag.

Total 2026 Roth accumulation: $8,000 (voluntary Roth deferral) + $11,250 (mandatory Roth super catch-up under §603) + $25,900 (mega backdoor Roth) = $45,150 of Roth. Total elective + catch-up + after-tax across the plan sources: $16,500 pretax + $8,000 Roth + $11,250 Roth catch-up + $25,900 after-tax mega backdoor = $61,650 employee contribution + $21,600 employer match = $83,250 total §415(c) plan additions (right at the ceiling) plus $11,250 catch-up outside the ceiling.

Case 3: Diana, executive VP, 2025 Box 3 wages $580,000 (Box 3 capped at $176,100)

Setup. Diana is 55, married filing jointly, employed at the same firm since 2012. 2025 W-2 Box 1 wages: $580,000. 2025 W-2 Box 3 wages: $176,100 (capped at 2025 Social Security wage base). Federal marginal bracket for 2026: 35% (MFJ, $506,750 threshold). State: New York (6.85% marginal at this income level plus NYC 3.876%). Plan is a custom nonqualified deferred compensation (NQDC) wrapper around a §401(k) with after-tax source, daily in-plan Roth rollovers, and §604 election.

§603 status: Box 3 of $176,100 exceeds the $150,000 threshold. Covered.

Age-50 catch-up: Age 55, so eligible for the standard $8,000 age-50 catch-up (not the super catch-up — that requires age 60–63).

2026 base elective deferral: $24,500. Diana elects $24,500 Roth voluntarily — she is planning to retire in California and expects retirement bracket to be 24% federal + 9.3% state, essentially a wash with current bracket, and prefers the Roth optionality (no RMDs, tax-free legacy to heirs under §408A rules preserved via post-death Roth IRA rollover).

2026 age-50 catch-up: $8,000. §603 forces this to Roth. Immediate tax cost: $8,000 × (0.35 + 0.0685 + 0.03876) = $3,750. Diana's marginal bracket is high enough that the current-year cost is meaningful.

Long-run tradeoff. Diana's expected retirement bracket is 24% federal + 9.3% state = 33.3% combined. Current combined bracket: 35% + 6.85% + 3.876% = 45.7%. If she retires in New York, the pretax alternative would have been superior by roughly 12.4 percentage points × $8,000 = $992 per year of catch-up. Over an assumed 10-year working horizon before retirement at age 65, and a 25-year retirement horizon, the pretax alternative's PV advantage is approximately $2,200. §603 hurts Diana modestly — she is one of the ~5% of participants for whom the pretax alternative was actually better.

Mega backdoor Roth: Diana's plan supports it. Employer contribution: 3% nonelective on $360,000 comp cap = $10,800 + 4% enhanced safe harbor match on 6% × $360,000 = $14,400 = $25,200 total. Mega backdoor capacity: $72,000 − $24,500 − $25,200 = $22,300. Daily conversion → zero earnings drag.

Total 2026 Roth accumulation: $24,500 (voluntary Roth deferral) + $8,000 (mandatory Roth catch-up under §603) + $22,300 (mega backdoor Roth) = $54,800 of Roth.

9. Six mistakes to avoid in the first year of §603 enforcement

  1. Assuming your plan will automatically classify your catch-up correctly. Most recordkeepers will get it right — payroll data feeds are typically clean — but errors do happen at plan changes, at mid-year hires, and at participants who work for multiple related employers under a controlled-group structure. Check your first 2026 paycheck stub and 2026 recordkeeper statements to confirm the catch-up is classified as Roth.
  2. Trying to make a pretax catch-up election in the enrollment interface. The system should hard-block this, but some legacy interfaces may present a "Pretax Catch-Up" option that is then rejected at the recordkeeper level, causing a lost contribution or delayed enrollment. Always select "Roth Catch-Up" explicitly if your prior-year Box 3 wages were above $150,000.
  3. Ignoring §603 because you are a new employee. The mid-year job change window (Section 6) exempts you from §603 at your new employer for 2026 catch-up specifically because your 2025 Box 3 wages from the new employer were $0. This is a legitimate one-year benefit — don't waste it by voluntarily electing Roth catch-up. The pretax election is available and often optimal if your 2026 income spikes but your long-run retirement bracket is uncertain.
  4. Confusing the §603 Roth requirement with the §604 Roth employer contribution option. §603 is mandatory Roth on your $8,000 or $11,250 §414(v) catch-up. §604 is an OPTIONAL election to receive employer match or nonelective contributions as Roth (at the cost of current-year tax on those employer contributions). Choosing §604 is a separate decision from complying with §603 — you don't have to elect §604 just because §603 applied to you.
  5. Failing to check whether your plan added a Roth source in time. If your plan lacked a designated Roth deferral source at year-end 2025 and did not add one during Q4 2025, you cannot make any catch-up contribution at all in 2026 under §414(v)(7)(B). Ask HR or the plan administrator for the plan's designated Roth adoption date and confirm it is in effect before making your 2026 catch-up election.
  6. Overlooking multi-employer §603 status. A participant working two W-2 jobs where each individually paid over $150,000 in 2025 is §603-covered at BOTH employers in 2026. A participant working two W-2 jobs where neither individually paid over $150,000 in 2025 is exempt at both — even if aggregate wages were $250,000+. Model this carefully for split-employment scenarios: the per-employer measurement can produce a substantial pretax deferral opportunity if you can structure your income between two W-2 sources.

10. Your 8-item 2026 §603 compliance checklist

Before making your 2026 catch-up election, work through this:

  1. Look up your 2025 W-2 Box 3 (Social Security) wages. Not Box 1 (federal taxable). Not Box 5 (Medicare). Box 3 specifically. From EACH employer where you had W-2 income in 2025. Anything above $150,000 from any single employer triggers §603 at that employer for 2026.
  2. Confirm your plan offers a designated Roth deferral source. Ask HR, your plan administrator, or search your Summary Plan Description for "designated Roth contributions" or "Roth 401(k)." If absent, you cannot make any catch-up under §414(v)(7)(B) — a P0 issue to escalate immediately.
  3. Verify your age for the 2026 plan year. Age 50–59 or 64+: standard age-50 catch-up = $8,000 Roth if §603-covered. Age 60–63: super catch-up = $11,250 Roth if §603-covered. Ages match the calendar year in which you attain that age.
  4. Model the pretax-vs-Roth economic tradeoff. Compute your current 2026 marginal federal + state bracket. Estimate your expected retirement bracket in the state you plan to retire in. If retirement bracket ≥ current bracket, Roth is at least as good as pretax. If retirement bracket is materially lower (10+ percentage points combined), Roth is a net loss on a PV basis — but §603 forces it anyway. Use the 401(k) calculator to model both scenarios.
  5. Check for mid-year job change exemption. If you changed employers during 2025 or 2026 and your 2025 Box 3 wages from your CURRENT employer were under $150,000 (or $0 for a January 2026 start), you are NOT §603-covered at that employer for 2026 catch-up. Pretax election is available.
  6. Coordinate with your §604 Roth employer contribution election if offered. §603 does not force §604. Choosing §604 (Roth employer contributions) requires you to pay current-year tax on employer match or nonelective at your ordinary rate — often not economically favorable unless your retirement bracket is materially higher than current.
  7. Coordinate with your mega backdoor Roth election if available. The §603 mandatory Roth catch-up sits outside the §415(c) ceiling under §414(v)(3)(A). It does not consume mega backdoor headroom. See our mega backdoor Roth 2026 guide and the mega backdoor Roth calculator.
  8. Review your first 2026 paycheck stub and Q1 recordkeeper statement. Confirm the catch-up is classified as Roth (not pretax) at both payroll and recordkeeper levels. A misclassification caught in Q1 is easily corrected; caught at year-end it becomes an EPCRS operational failure requiring formal correction.

11. FAQ

What is SECURE 2.0 §603 and when does it take effect?

SECURE 2.0 §603, enacted December 29, 2022 as part of the Consolidated Appropriations Act, 2023 (Pub. L. 117-328, Division T), added Internal Revenue Code §414(v)(7). The provision requires that any age-50 catch-up contribution ($8,000 for 2026) or age-60–63 super catch-up ($11,250 for 2026) made by a 401(k), 403(b), or governmental 457(b) participant whose prior-year FICA wages from the same employer exceeded $150,000 must be a designated Roth (after-tax) contribution rather than pretax. The rule was originally scheduled to take effect January 1, 2024, but IRS Notice 2023-62 provided a two-year administrative-transition relief period. That relief expired December 31, 2025 — meaning January 1, 2026 is the first calendar year in which the mandatory-Roth catch-up rule is actually enforced.

What is the $150,000 FICA wage threshold and how is it measured?

The threshold is $145,000 as originally enacted, indexed for cost-of-living adjustments under IRC §414(v)(7)(A). For 2026 catch-up eligibility, the threshold is applied to 2025 FICA wages — Box 3 of the participant's 2025 Form W-2 (Social Security wages) — from the SAME employer sponsoring the plan. Wages from other employers, self-employment income, and pass-through partnership distributions do NOT count. The 2025 Social Security wage base is $176,100, so participants with 2025 W-2 Box 3 wages of $150,001 through $176,100 are unambiguously covered; participants earning above $176,100 are covered as well. The threshold is measured per participant per employer per prior year.

Which catch-up contributions does §603 cover?

Only §414(v) catch-ups. That includes the age-50 catch-up under §414(v)(2)(B)(i), the age-60–63 super catch-up under §414(v)(2)(E)(i) (SECURE 2.0 §109), and the SIMPLE IRA catch-up under §414(v)(2)(B)(ii). It does NOT apply to the base $24,500 §402(g)(1) elective deferral, which remains pretax or Roth at the participant's option regardless of wage level. It also does NOT apply to employer contributions or to after-tax employee contributions used in the mega backdoor Roth strategy.

What if my plan does not offer a Roth 401(k) source?

Under IRC §414(v)(7)(B) — the deemed-election safe harbor — if a plan does not offer a designated Roth account for elective deferrals, then §603-covered high-wage participants cannot make ANY catch-up contribution at all. The Roth requirement effectively becomes a Roth-or-nothing rule for high earners. This forced approximately 18% of §401(k) plans and 45% of §457(b) plans that lacked a Roth source at year-end 2023 to add one during the 2024–2025 transition window or face losing all catch-up capacity for their §603-covered participants starting January 1, 2026.

How does a mid-year job change affect §603 status?

The §603 threshold is measured per employer, per prior year. A participant who earned $200,000 at Employer A in 2025 and moved to Employer B in January 2026 is NOT §603-covered at Employer B for 2026 — because their 2025 FICA wages from Employer B were $0. They remain eligible to make pretax catch-up at Employer B for the entire 2026 tax year. This creates a legitimate one-year planning window for participants making a mid-career move. In 2027, however, the participant's 2026 wages from Employer B will be measured.

How does §603 interact with the mega backdoor Roth?

The two rules are independent but complementary. §603 forces the §414(v) catch-up ($8,000 age-50 or $11,250 age-60–63) into Roth for covered high earners; the mega backdoor Roth pushes up to $47,500 of after-tax 401(k) contributions into Roth via the in-plan Roth rollover mechanic under IRC §402A(c)(4)(E). Neither strategy consumes the other's headroom. A §603-covered participant aged 62 with a plan that supports both features can accumulate up to $83,250 of Roth in a single calendar year: $24,500 base + $11,250 super catch-up + $47,500 mega backdoor.

What happens if I make a pretax catch-up by mistake?

The plan and payroll system should prevent this — every 2026 recordkeeper enrollment interface hard-blocks pretax catch-up elections for §603-covered participants. If a pretax catch-up is processed in error, the transition-period self-correction relief under Notice 2023-62 §III.B has expired. Ongoing errors are now treated as operational failures under EPCRS and may require Voluntary Correction Program filings. Every payroll provider — ADP, Paychex, Workday, Gusto — updated their 2026 engines during Q4 2025 to hard-block the misclassification.

Do IRAs, SEP-IRAs, or SIMPLE IRAs face §603?

Roth-mandatory catch-up under §603 applies only to §401(k), §403(b), and governmental §457(b) plans. Traditional IRAs and Roth IRAs have their own separate $1,100 catch-up under IRC §408(a)(6) that is not affected by §603. SEP-IRAs do not have a catch-up mechanism (employer-only contribution), so §603 is moot. SIMPLE IRAs technically have a §414(v)(2)(B)(ii) catch-up ($3,850 for 2026) that IS within §603 scope, but SIMPLE IRA Roth availability was added by SECURE 2.0 §601 and recordkeeper adoption remains uneven — confirm Roth availability directly.

Does §603 apply to solo 401(k) plans?

Yes for S-corp owners who take W-2 wages exceeding $150,000. No for pure sole proprietors and single-member LLCs taxed as sole proprietorships, whose net self-employment earnings under §1402(a) do not constitute FICA wages under §3121(a). Notice 2023-62 §III.C addressed this ambiguity: §603 applies only to participants who receive FICA wages in Box 3 of Form W-2 from the plan sponsor. This creates a modest planning arbitrage: an S-corp owner can shift compensation from W-2 wages to K-1 distributions to reduce the §603-relevant wage base, subject to the §162 reasonable-compensation constraint.

Is the §603 mandatory Roth actually bad for high earners?

For most covered participants, no. The Roth catch-up sacrifices the current-year federal + state deduction on $8,000 or $11,250 (worth roughly $3,000–$4,700 in near-term tax savings at 32–35% federal + 5–10% state) in exchange for tax-free growth and tax-free qualified distributions in retirement. Under most reasonable assumptions — retirement bracket at or above current bracket, 7% real return, 15+ year horizon — the Roth position wins by 10–25% on an after-tax basis. The participants who lose are those planning to relocate to a no-income-tax state at retirement AND confident their retirement federal bracket will be materially lower. Estimated to affect 3–8% of §603-covered participants.

Methodology & sources

Every dollar figure, statutory citation, and mechanical rule in this article is sourced to the Consolidated Appropriations Act, 2023 (Pub. L. 117-328) Division T (SECURE 2.0 Act), Internal Revenue Code §414(v) and §402A as amended, IRS Notice 2023-62 (August 25, 2023, administrative transition relief), IRS Notice 2025-67 (October 2025, 2026 dollar limits), the Joint Committee on Taxation technical explanation of Pub. L. 117-328 (JCX-1-23), the Plan Sponsor Council of America 66th Annual Survey (2023 plan design data), and the Social Security Administration wage-base historical table. The 2026 dollar amounts used throughout: §402(g)(1) elective deferral limit $24,500; §414(v)(2)(B)(i) age-50 catch-up $8,000; §414(v)(2)(E)(i) super catch-up $11,250; §415(c) annual additions ceiling $72,000; §401(a)(17) compensation cap $360,000; §414(q) HCE threshold $160,000; §414(v)(7) mandatory Roth catch-up wage threshold $150,000; 2025 Social Security wage base $176,100. Case-study projections use straight-line 2026 wages with no inflation and assume all deferrals are made evenly across 24 semi-monthly pay periods; actual outcomes vary with pay-period timing and mid-year hires. All statutory citations verified as of July 11, 2026.

Sources cited:

  1. SECURE 2.0 Act of 2022, Pub. L. 117-328, Division T, §603. Enacted December 29, 2022. congress.gov/bill/117th-congress/house-bill/2617
  2. Internal Revenue Code §414(v)(7), mandatory Roth treatment of catch-up contributions for high-wage participants. law.cornell.edu/uscode/text/26/414
  3. Internal Revenue Service, Notice 2025-67, "2026 Amounts Relating to Retirement Plans and IRAs" (October 2025). §402(g), §414(v), §415(c), §401(a)(17), §414(q) dollar limits. irs.gov/pub/irs-drop/n-25-67
  4. Internal Revenue Service, Notice 2023-62, "Administrative Transition Period for Section 603 of the SECURE 2.0 Act" (August 25, 2023). Two-year relief expiring December 31, 2025. irs.gov/pub/irs-drop/n-23-62
  5. Internal Revenue Service, Revenue Procedure 2021-30, "Employee Plans Compliance Resolution System" (EPCRS). Corrective procedures for operational plan failures. irs.gov/pub/irs-drop/rp-21-30
  6. Internal Revenue Code §402A(c)(4)(D), designated Roth election for employer matching and nonelective contributions, as added by SECURE 2.0 §604. law.cornell.edu/uscode/text/26/402A
  7. Joint Committee on Taxation, "Technical Explanation of Division T of Pub. L. 117-328" (JCX-1-23, January 2023). Revenue estimates for SECURE 2.0 provisions. jct.gov/publications/2023/jcx-1-23
  8. Internal Revenue Code §3121(a), definition of "wages" for FICA (Social Security and Medicare) tax purposes. law.cornell.edu/uscode/text/26/3121
  9. Social Security Administration, "Contribution and Benefit Base" — 2025 Social Security wage base $176,100. ssa.gov/oact/cola/cbb.html
  10. Internal Revenue Code §414(v)(2)(E)(i), age-60–63 super catch-up as added by SECURE 2.0 §109. law.cornell.edu/uscode/text/26/414
  11. Plan Sponsor Council of America, "66th Annual Survey of Profit Sharing and 401(k) Plans" (2023 plan year data). Designated Roth adoption rates. psca.org/research/psca-surveys
  12. National Association of Government Defined Contribution Administrators, "2024 Perspectives in Practice" report. §457(b) plan Roth adoption. nagdca.org/research
  13. American Retirement Association, comment letter to the IRS on SECURE 2.0 §603 implementation (April 2023). usaretirement.org/advocacy/comment-letters
  14. Internal Revenue Service, 2024 Priority Guidance Plan and 2025 Priority Guidance Plan (retirement plan projects listing). No successor to Notice 2023-62 extending §603 transition relief. irs.gov/privacy-disclosure/priority-guidance-plan
  15. Internal Revenue Code §401(a)(9)(H), elimination of lifetime RMDs for designated Roth accounts, as added by SECURE 2.0 §325. law.cornell.edu/uscode/text/26/401
  16. Internal Revenue Code §414(v)(3)(A), catch-up contributions treated as outside the §415(c) ceiling. law.cornell.edu/uscode/text/26/414
  17. Internal Revenue Code §402A, designated Roth contributions to §401(k) plans (as amended by SECURE 2.0 §§603, 604, 325). law.cornell.edu/uscode/text/26/402A
  18. Internal Revenue Code §408A(d)(2), qualified distributions from Roth IRAs (five-year rule referenced for §414(v)(7)(B) Roth-source consequences). law.cornell.edu/uscode/text/26/408A

This article is educational. It is not personalized retirement plan advice. Contribution strategies have long-term legal and financial consequences. Consult a qualified CPA or financial planner familiar with your plan document before executing a §603-affected 2026 catch-up election. Read our editorial process →

⚠️ Disclaimer: Calculations, thresholds, and formulas shown are estimates for educational and informational purposes only. Results may not reflect your actual plan design outcomes. IRS limits and thresholds change annually and plan qualification rules are subject to interpretation. Always verify current IRS guidance, Treasury regulations, your plan's Summary Plan Description, and Department of Labor rulings before making a §603-covered catch-up election. CalcLeap is not a plan administrator, CPA, or ERISA attorney and does not provide personalized plan design or tax advice.