What is the SECURE 2.0 Roth catch-up mandate?

It's a rule from Section 603 of the SECURE 2.0 Act requiring that age-50-and-older catch-up contributions to a 401(k)-type plan be made as Roth (after-tax) contributions, not pre-tax, for any participant whose prior-year FICA wages from the plan's sponsoring employer exceeded a set threshold. The statute sets a $145,000 base figure, indexed for inflation; per IRS Notice 2025-67, the threshold that applies to 2026 catch-up contributions (measured against 2025 wages) is $150,000. Originally slated to take effect for 2024, the IRS delayed enforcement via Notice 2023-62, which provided a two-year administrative transition period through December 31, 2025; final regulations were issued September 16, 2025. The mandate is effective for taxable years beginning after December 31, 2025 — meaning 2026 catch-up contributions are the first ones actually subject to it.

Does this mandate apply to a sole proprietor's Solo 401(k) catch-up contribution?

No, and this is the detail almost everyone gets wrong. The wage threshold is measured against FICA wages paid by the employer sponsoring the plan in the prior year — and a sole proprietor with no employees has no FICA wages at all, regardless of how much net Schedule C profit they earn. Net self-employment earnings are not FICA wages; they're reported and taxed through Schedule SE, an entirely separate mechanism. A freelancer with $400,000 in Schedule C profit and no S-corp election has a prior-year wage figure of exactly $0 for this test, so the mandate cannot apply to their catch-up contribution, however large their income.

Which freelancers does the mandate actually reach?

Only a freelancer who has elected S-corporation taxation for their business and pays themselves a W-2 salary through that S-corp, where the S-corp (or an affiliated entity) also sponsors the 401(k) plan the catch-up is made to. If that W-2 salary exceeded the threshold ($150,000 for 2025 wages, determining 2026 catch-up treatment) in the prior year, the mandate requires this year's catch-up contribution to that plan to be Roth. A freelancer who runs an S-corp but pays themselves a modest salary well under the threshold — even while taking large distributions, which aren't wages — is not caught by the rule for that year.

What happens if my S-corp's 401(k) plan doesn't offer a Roth option?

Under the statute and subsequent IRS guidance, a plan that doesn't offer a Roth deferral option simply cannot allow any catch-up contributions at all from participants over the wage threshold — not that those participants default to a pre-tax catch-up. Plan sponsors affected by this had to add a Roth feature to their 401(k) plan document, generally by the applicable amendment deadline, or lose the ability to accept catch-up contributions from their highly-compensated participants entirely. If you sponsor your own S-corp's solo 401(k) and pay yourself above the threshold, confirm your plan document has been amended to include a Roth deferral option before you attempt a 2026 catch-up contribution.

Does the mandate affect the employer profit-sharing side of a Solo 401(k)?

No. The Roth catch-up mandate applies only to the employee elective-deferral catch-up — the extra amount an employee age 50 or older can add on top of the standard deferral limit. It has no effect on employer contributions (profit-sharing, in a Solo 401(k)), which are never characterized as Roth or pre-tax at the point of contribution the way employee deferrals are, and it has no effect on the standard (non-catch-up) portion of the employee deferral either.

The SECURE 2.0 Roth Catch-Up Mandate: Why It Hits S-Corp Freelancers But Not Sole Proprietors

Published: August 29, 2026 · Reading time: 8 min

TL;DR: Starting with 2026 contributions, SECURE 2.0 §603 requires 401(k) catch-up contributions (age 50+) to be made as Roth, not pre-tax, for anyone whose 2025 W-2 wages from the plan's sponsoring employer exceeded $150,000 (the statutory $145,000 base, indexed per IRS Notice 2025-67). The trigger is FICA wages, not income — so a sole proprietor's Schedule C profit never counts, no matter how high it is, and the mandate can only reach a freelancer who has elected S-corp status and pays themselves a W-2 salary above the threshold through the entity sponsoring their 401(k). If your plan doesn't already offer a Roth deferral option, an affected owner-employee can't make any catch-up contribution at all until the plan is amended — check your plan document before assuming a pre-tax catch-up is still available.

If you're a freelancer age 50 or older making catch-up contributions to a 401(k)-type plan in 2026, there's a new rule to check before you fund it — and whether it applies to you at all depends entirely on how your business is structured, not on how much you earn.

The mandate, in plain terms

SECURE 2.0 Act §603 requires that if a 401(k) plan participant's FICA wages from the plan's sponsoring employer exceeded a set threshold — a $145,000 statutory base, indexed for inflation, which works out to $150,000 for 2025 wages under IRS Notice 2025-67 — in the prior calendar year, any catch-up contribution they make this year to that plan must be a Roth (after-tax) contribution. A pre-tax catch-up is no longer an option for that participant, for that plan, for that year.

The rule was originally supposed to start in 2024. The IRS delayed enforcement once, through Notice 2023-62, which provided a two-year administrative transition period through December 31, 2025 — giving plan sponsors time to amend their documents and add Roth deferral options where they didn't already exist. Final regulations implementing the mandate were issued September 16, 2025. 2026 catch-up contributions are the first ones actually subject to the mandate.

Why "wages" is the whole ballgame for a freelancer

The single most important word in the statute, for a self-employed reader, is wages — specifically, FICA wages reported on a W-2 from the employer that sponsors the plan.

Business structure	Prior-year "wages" for this test	Mandate can apply?
Sole proprietorship (Schedule C, no S-corp election)	$0 — net SE earnings aren't FICA wages	No, regardless of profit
Single-member LLC taxed as a sole proprietorship	$0 — same as above	No, regardless of profit
S-corp with a modest W-2 salary, large distributions	Whatever the W-2 salary was (distributions don't count)	Only if the salary itself exceeds the threshold
S-corp with a W-2 salary above $150,000 (2025 wages)	The actual W-2 wage figure	Yes

A sole proprietor's net self-employment earnings are taxed and reported through Schedule SE, an entirely separate mechanism from W-2 FICA wages — so a freelancer with $500,000 in Schedule C profit and no S-corp election simply has no wage figure for this test to measure against. The mandate has nothing to attach to.

The moment a freelancer elects S-corp status and starts paying themselves a reasonable W-2 salary — which the IRS already requires of profitable S-corp owner-employees — that salary becomes the exact figure this rule tests. Pay yourself $180,000 in W-2 wages through your S-corp in 2026, and your 2027 catch-up contribution to that S-corp's 401(k) must be Roth. Pay yourself $120,000 in wages while taking the rest as distributions, and you stay under the threshold even if your total compensation and distributions together dwarf what a sole proprietor earning the same total would have.

The plan-amendment trap

This is the detail that catches owners of their own small 401(k) plans off guard: a plan that hasn't added a Roth deferral option doesn't default affected participants to a pre-tax catch-up — it simply can't accept a catch-up contribution from them at all. If you sponsor your own S-corp's solo 401(k), pay yourself above the threshold, and haven't confirmed your plan document was amended to add Roth deferrals, don't assume your usual catch-up contribution will go through as it always has.

Before making a 2026 catch-up contribution if you run your own plan:

Confirm your prior-year W-2 wages from the plan's sponsoring entity against the current threshold ($150,000 for 2025 wages, per Notice 2025-67 — confirm the exact figure that applies to your specific prior year with the IRS or your plan's third-party administrator, since it's indexed and adjusts annually)
Confirm your plan document includes a Roth deferral option, not just a traditional one
If it doesn't, amend the plan before attempting the contribution — most third-party administrators can process this amendment quickly, but it isn't instantaneous

What the mandate doesn't touch

The employer profit-sharing contribution to a Solo 401(k) — never characterized as Roth or pre-tax at the point of contribution, so it's unaffected regardless of wages.
The standard (non-catch-up) portion of the employee deferral — the mandate only reaches the extra catch-up amount, not the base deferral limit.
A SEP-IRA — SEP plans have no catch-up contribution concept at all (see SEP-IRA vs. Solo 401(k)), so this mandate has nothing to apply to there.
Any sole proprietor or single-member LLC without an S-corp election — as covered above, there's no wage figure for the rule to test.

Authoritative References

Running an S-corp and not sure if this mandate touches your 401(k) plan? Start a free CentSense account to track your W-2 wages against Schedule C profit side by side, so you know exactly which rules attach to which number before your next contribution.

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