The shift to Roth-only catch-up contributions under SECURE 2.0 is an operational reality for 2026. For 401(k) recordkeepers, the focus shifts from understanding policy to effectively implementing this change at scale. The primary challenge will be aligning payroll data, plan configurations, and contribution-processing workflows to ensure compliance without incurring costly post-payroll corrections.
This guide breaks down what recordkeepers must prioritize to stay compliant, reduce operational risk, and maintain service excellence. The action-oriented checklist will help recordkeepers prepare their systems, processes, and integrations for Roth catch-ups.
What are Roth-only catch-ups? What are Roth-only catch-ups?
Starting in 2026, participants aged 50 or older with prior-year FICA wages of $150,000 or more (as reported on W-2 Box 3) must make catch-up contributions only on a Roth (after-tax) basis.
Recordkeepers must accurately identify eligible participants using payroll-sourced wage data that typically resides outside your core system. This shift creates three immediate implications:
- Real-time eligibility determination challenges.
- Data dependency on payroll providers and plan sponsors.
- Higher risk of misclassification and rework if the data is late or inaccurate.
The recordkeeper’s operational checklist of Roth-only catch-ups
To operationalize Roth-only catch-ups effectively, recordkeepers need a structured approach that connects data, systems, and workflows. The checklist below highlights key steps at which mistakes, delays, or miscommunication can lead to compliance issues or affect participants. Use this as a guide to help you transition from fixing problems as they arise to executing plans proactively:
1. Participant identification and eligibility logic
Start with precise identification of affected participants:
- Flag participants aged 50+ eligible for catch-ups.
- Identify HPI status using prior-year (2025) W-2 Box 3 FICA wages.
- Build automated eligibility tracking tied to payroll feeds.
Manual tracking is not sustainable for recordkeepers managing millions of participant records. Automated validation helps avoid misclassification and reduces compliance risks.
Modern platforms that centralize participant data and automate eligibility checks significantly reduce errors and ensure real-time accuracy.
2. Payroll and contribution source mapping
Roth-only catch-ups introduce new contribution source complexities:
- Update payroll integrations to distinguish pre-tax vs Roth catch-ups.
- Ensure correct tax treatment at source.
- Validate contribution limits dynamically.
Even small payroll mismatches can cascade into reporting and compliance failures. Real-time payroll validation and contribution tracking are essential to ensure accuracy and avoid downstream corrections.
3. Plan document and configuration updates
Operational readiness must be backed by plan-level configuration:
- Amend plan documents to reflect Roth catch-up requirements.
- Update plan rules within recordkeeping systems.
- Align eligibility, limits, and contribution sources.
Rigid legacy systems become a liability as traditional platforms often struggle to adapt to regulatory changes, increasing the risk of non-compliance and delays.
4. Participant communication and experience
Roth-only catch-ups introduce confusion for participants:
- Explain tax implications clearly (Pre-tax vs Roth).
- Update participant portals and statements.
- Provide self-service tools for contribution elections.
Today’s participants expect intuitive, digital-first experiences. Recordkeepers must ensure that communication is compliant, personalized, and easy to understand.
5. Compliance testing and reporting adjustments
Roth catch-ups impact multiple compliance workflows:
- Update nondiscrimination testing inputs.
- Ensure accurate Form 5500 reporting.
- Track Roth vs. Pre-tax contributions separately.
As 401(k) compliance becomes increasingly complex, automated testing and reporting are essential. AI-driven compliance systems can identify discrepancies early and help prevent costly penalties.
6. Data integrity, audit trails, and error handling
With new contribution rules comes higher scrutiny:
- Maintain detailed audit trails for contribution classifications.
- Enable real-time error detection and correction workflows.
- Ensure data consistency across systems.
A single data inconsistency, such as an incorrect income flag, can lead to improper treatment of contributions, affecting both compliance and participant outcomes. Automation and real-time validation are no longer optional.
7. Scalability and peak-season readiness
Catch-up contributions often spike during year-end processing:
- Prepare for increased transaction volumes.
- Ensure systems can scale without latency.
- Optimize workflows for peak processing cycles.
Recordkeepers already face seasonal workload pressures, and Roth catch-ups add another layer of complexity. Scalable, cloud-based systems help manage these spikes efficiently while maintaining performance and accuracy.
8. Integration across the plan lifecycle
Roth-only catch-ups are not a standalone process. Recordkeepers must:
- Prepare for the impact throughout the plan lifecycle, from contributions to compliance testing, reporting, and ultimately distributions.
- Ensure seamless data flow across all modules.
- Eliminate data silos between systems.
Disconnected systems lead to increased manual effort, delayed processing, and higher compliance risks. Achieving end-to-end integration is essential for operational efficiency.
Operational readiness with Congruent Solutions
Roth-only catch-ups are a stress test for a recordkeeper’s operational readiness. It is becoming more complex, and legacy systems are no longer sufficient.
Congruent Solutions is a purpose-built technology solutions and services partner for 401(k) recordkeepers that offers:
- CORE 2.0 platform: A cloud-based, AI-powered recordkeeping and administration platform with CORE PlanSuite that automates participant data management, contribution tracking, and compliance workflows in real time.
- End-to-end plan administration services: From compliance testing and Form 5500 filing to loans, distributions, and plan information management.
- Automation and real-time validation: Reduce manual errors, ensure accurate contribution classification, and improve operational efficiency.
- Scalable back-office support: Helps recordkeepers manage seasonal spikes and evolving regulatory demands without increasing internal overhead.
- Integrated data and reporting: Provides a single source of truth with real-time analytics and dashboards for better decision-making.
With nearly two decades of experience and millions of participant records managed, Congruent Solutions enables recordkeepers to modernize operations, stay compliant with evolving regulations, such as Roth catch-ups, and deliver a superior participant experience.
Connect with our experts to assess your current readiness, identify operational gaps, and implement scalable solutions tailored to your recordkeeping business.
