--- title: "IRS Issues Final Regulations on SECURE 2.0 Catch-Up Provisions | SPARK Blog | ADP" description: "Highlights Impacted Employers: Employers offering 401(k) or a similar workplace retirement plan. Effective Date: The final regulations confirm that..." --- [Legislation](/spark/legislation) # IRS Issues Final Regulations on SECURE 2.0 Catch-Up Provisions Part of a series|[SECURE-20-Act-Insights](/spark/series/s/secure-20-act-insights) [![Eye on Washington Article contributor](/-/media/adp/blog/images/placeholders/eow_contributor.jpg?h=300&iar=0&w=300&rev=b149cf7745734d359653676a74648319&hash=A5E14414815B203B27D5E29C353BBD71)Eye on Washington Team]() - [Share Spark Article on LinkedIn](https://www.linkedin.com/shareArticle?mini=true&url=https://www.adp.com/spark/articles/2025/10/irs-issues-final-regulations-on-secure-20-catch-up-provisions&title=IRS%20Issues%20Final%20Regulations%20on%20SECURE%202.0%20Catch-Up%20Provisions&summary=%3Cp%3E%3Cem%3EFinal%20regulations%20were%20recently%20issued%20to%20implement%20the%20Act's%20%22Rothification%22%20requirements.%20Below%20we%20summarize%20key%20provisions.%3C%2Fem%3E%3C%2Fp%3E&source=in1.com) - [Share Spark Article on Facebook](http://www.facebook.com/share.php?u=https://www.adp.com/spark/articles/2025/10/irs-issues-final-regulations-on-secure-20-catch-up-provisions) - [Share Spark Article on Twitter](https://twitter.com/intent/tweet?url=https://www.adp.com/spark/articles/2025/10/irs-issues-final-regulations-on-secure-20-catch-up-provisions&text=IRS%20Issues%20Final%20Regulations%20on%20SECURE%202.0%20Catch-Up%20Provisions) - [Share Spark Article via Email](mailto:?subject=IRS%20Issues%20Final%20Regulations%20on%20SECURE%202.0%20Catch-Up%20Provisions&body=https://www.adp.com/spark/articles/2025/10/irs-issues-final-regulations-on-secure-20-catch-up-provisions) - Print Spark Article _Final regulations were recently issued to implement the Act's "Rothification" requirements. Below we summarize key provisions._ ## h2: Highlights **Impacted Employers:** Employers offering 401(k) or a similar workplace retirement plan. **Effective Date:** The final regulations confirm that these rules will generally go into effect in 2026. Review the details below. **Summary:** The Internal Revenue Service (IRS) recently issued [final regulations](https://www.federalregister.gov/documents/2025/09/16/2025-17865/catch-up-contributions) that provide guidance for retirement plan catch-up contributions reflecting statutory changes under several provisions of the [SECURE 2.0 Act of 2022](https://www.adp.com/spark/articles/2023/01/secure-20-act-of-2022-makes-sweeping-changes-to-retirement-savings-plans.aspx) ("SECURE 2.0" or "Act"). **Next Steps:** Work with your retirement plan custodian and legal counsel to review how the final regulation applies to your plan. Prepare and adopt necessary plan amendments by the December 31, 2026 SECURE 2.0 amendment deadline. Plan sponsors that currently offer catch-up contributions but do not offer Roth contributions must add a Roth contribution feature to enable "high wage earners" to make catch-up contributions. ### h3: Background Historically employers may offer participants who are age 50 or older the opportunity to defer additional compensation (more than the standard annual limit, which is $23,500 for 2025) in the form of a catch-up contribution ($7,500 in 2025) to their retirement accounts in certain retirement plans including 401(k), 403(b) and 457(b) plans. The Act requires employers that offer catch-up contributions to treat the catch-up contributions made by "high wage earners" as post-tax Roth contributions ("Rothificaton"). This requirement applies to most retirement plans. It does not apply to SARSEP, SIMPLE IRA, Starter K or Safe Harbor 403(b) plans. A "high wage earner" under the Act is an employee whose wages from the employer sponsoring the plan during the preceding calendar year exceeded $145,000 (indexed annually). The wage threshold is based on Social Security (FICA) wages paid to the individual by the employer sponsoring the plan. | **Capabilities** | ![ADP](https://www.adp.com/-/media/adp/redesign2018/images/compare/competitors_features_adplogo_en.png?rev=f1867290b86d499b8396eeb222066c23&hash=405F388DA12331C353063F943B0D2DD6) | **Gusto** | | --- | --- | --- | | **Payroll** |   |   | | --- | --- | --- | | **24/7 live support** (Gusto provides support from 5am-5pm PT, Monday through Friday) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Comprehensive tools for managing [State Unemployment Insurance](https://www.adp.com)** (claim responses, benefit payment reviews, best practices consulting) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Integrated time tracking suite,** including scheduling and physical time clocks | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Dedicated onboarding support** for new small business clients of any size (across all packages) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Mobile app for on-the-go payroll and HR** (Gusto offers mobile access only via web browser) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Same-day ACH processing** | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Two-day processing cycles for all clients** (no direct deposit limits applied) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Register with tax agencies in all 50 states (without needing a third-party partner)** | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Customer support** available through the payroll provider\\'s Apple® iOS app | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Integration with over 30 leading Point of Sale (POS) solutions via partner apps** | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Single invoice billing** that combines ADP payroll with partner services | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **75 years of experience in payroll services** | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **HR & Business** |   |   | | --- | --- | --- | | **Employee handbook wizard**, tailored for your state or jurisdiction | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Job postings through ZipRecruiter®** | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Job description creation tool** | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Employee discount program** for brand-name products and everyday essentials | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Live consultation for R&D tax credits** to determine the amount based on your business | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Easy setup and management of Google Ads marketing campaigns** | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | | **Access to free and discounted legal services** (provided by third-party) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg?rev=c2a5316ee3d74309a287d0df5c4faa9c&hash=CB4071461EA1AA99A025075517798499) | not offered | ## The Final Regulations Final regulations were recently issued to implement the Act's "Rothification" requirements. Below we summarize key provisions. ## Determining when the $145,000 Threshold Is Met - Aggregation of Wages for Related Employers As mentioned above, treatment of catch-up contributions are treated differently depending on whether a participant's income exceeds a designated threshold. The Rothification catch-up requirement applies to a participant whose annual FICA wages "from the employer sponsoring the plan" exceed $145,000 for the preceding year. The final regulations allow the employer sponsoring the plan to combine the wages of other related employers (who also employ the employee participant) using a common paymaster to determine if the $145, 000 threshold is met. Briefly stated, a [common paymaster](https://www.irs.gov/government-entities/common-paymaster) is an entity within the group of related employers that is designated to handle payroll and taxes for all related companies on a combined basis. Recommended for You [trends](/spark/trends.aspx) [How Ultrasmall Employers Are Embracing Retirement Plans](https://www.adp.com/spark/articles/2026/01/how-ultrasmall-employers-are-embracing-retirement-plans.aspx) [trends](/spark/trends.aspx) [How Ultrasmall Employers Are Embracing Retirement Plans](https://www.adp.com/spark/articles/2026/01/how-ultrasmall-employers-are-embracing-retirement-plans.aspx) [trends](/spark/trends.aspx) [How Ultrasmall Employers Are Embracing Retirement Plans](https://www.adp.com/spark/articles/2026/01/how-ultrasmall-employers-are-embracing-retirement-plans.aspx) | **Capabilities** | ![ADP](https://www.adp.com/-/media/adp/redesign2018/images/compare/competitors_features_adplogo_en.png?h=32&w=70&rev=f1867290b86d499b8396eeb222066c23&hash=B4F789675FB5346E9FB3F5AC18864035) | [Paycom1](/compare/adp-vs-paycom.aspx) | | --- | --- | --- | | **Payroll** | | Market Leader Payroll Services NEAT by NelsonHall2 | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Global payroll countries supported | 140 | Not Offered | | Managed payroll services | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | **HR & Business** | | Full HR suite (HR, talent, time, benefits, payroll, recruitment and learning management) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | | Easily create custom reports by clicking on the fields you need, right from the page you\\'re on | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Employee discount program for discounts on travel, wellness, entertainment and more | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Freelance and contractor management platform and marketplace | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Personalized lifestyle benefits with 150+ services to fit employees’ lifestyle needs | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Personalized benefits decision support help create a best-fit health and lifestyle recommendation | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Employee utilization dashboard | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | | Industry-leading marketplace for third-party integrations | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Online recruitment with ZipRecruiter® | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Best-of-breed partners across 17 solution categories and nine industries | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Instant access to secure APIs, tools and resources for IT teams and developers | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Dedicated broker and accountant portal | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Insurance services (e.g., workers’ comp, business, health) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | HR Outsourcing & Managed Services (payroll, HR and benefits) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Professional employer organization (PEO) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Employee solution center with phone support for employee questions | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Professional services (for project support) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Data-Powered Foundation: global data platform spanning 1.1 million clients across 140 countries and territories and 42 million wage earners worldwide. | 140 | 5 | | Executive and manager insights for overtime, turnover risk and more | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | ## Counting a High Wage Earner's Regular Roth Contributions Toward the Roth Catch-up Requirement For plans that use concurrent elections (meaning the plan permits participants to make separate elections for regular and catch-up deferrals during each payroll), the plan may automatically deem the separate catch-up election as Roth. This is the case even if as of the end of the year, those contributions turn out not to be catch-up contributions (the participant's total deferrals have not exceeded the annual contribution limit, $23,500 for 2025). > Having humans involved in employment decisions that affect people's lives and careers is essential, no matter what tools employers use. Helena Almeida, Vice President and Managing Counsel, AI Legal Officer, ADP | **Capabilities** | ![ADP](https://www.adp.com/-/media/adp/redesign2018/images/compare/competitors_features_adplogo_en.png?h=32&w=70&rev=f1867290b86d499b8396eeb222066c23&hash=B4F789675FB5346E9FB3F5AC18864035) | [Paycom1](/compare/adp-vs-paycom.aspx) | | --- | --- | --- | | **Payroll** | | Market Leader Payroll Services NEAT by NelsonHall2 | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Global payroll countries supported | 140 | Not Offered | | Managed payroll services | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | **HR & Business** | | **Flexibility** | | Full HR suite (HR, talent, time, benefits, payroll, recruitment and learning management) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | | Easily create custom reports by clicking on the fields you need, right from the page you\\'re on | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Employee discount program for discounts on travel, wellness, entertainment and more | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Freelance and contractor management platform and marketplace | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Personalized lifestyle benefits with 150+ services to fit employees’ lifestyle needs | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Personalized benefits decision support help create a best-fit health and lifestyle recommendation | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Employee utilization dashboard | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | | **Integrations** | | Industry-leading marketplace for third-party integrations | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Online recruitment with ZipRecruiter® | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Best-of-breed partners across 17 solution categories and nine industries | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Instant access to secure APIs, tools and resources for IT teams and developers | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Dedicated broker and accountant portal | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | **Services & Support** | | Insurance services (e.g., workers’ comp, business, health) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | HR Outsourcing & Managed Services (payroll, HR and benefits) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Professional employer organization (PEO) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Employee solution center with phone support for employee questions | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Professional services (for project support) | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | **Data & Insights** | | Data-Powered Foundation: global data platform spanning 1.1 million clients across 140 countries and territories and 42 million wage earners worldwide. | 140 | 5 | | Executive and manager insights for overtime, turnover risk and more | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | ### h3: _Italic - Example_ A participant who is over age 50 with prior year wages exceeding $145,000 elects to defer an annual total of $14,000 pre-tax and $5,000 as catch-up. Under the tax code, catch-up contributions are defined as being in excess of other plan limits as of the end of the plan year. Therefore, the separate, concurrent $5,000 deferral for this participant wouldn't normally be considered catch-up since they did not exceed the annual contribution limit. However, under the final regulations the plan may consider the separate $5,000 deferral as a Roth catch-up election even though the participant never exceeded their annual pre-tax limit of $23,500. For plans that use a single election, those plans generally "spill over" regular pre-tax to catch-up once the annual contribution limit has been reached. The final regulations permit spillover as deemed Roth catch-up elections either (1) once the employee's year-to-date pre-tax deferrals reach the annual limit, or (2) once the employee's year-to-date aggregate (pre-tax and Roth) deferrals exceed the annual limit. | **Capabilities** | ![ADP](https://www.adp.com/-/media/adp/redesign2018/images/compare/competitors_features_adplogo_en.png?h=32&w=70&rev=f1867290b86d499b8396eeb222066c23&hash=B4F789675FB5346E9FB3F5AC18864035) | [Paycom1](/compare/adp-vs-paycom.aspx) | | --- | --- | --- | | **Payroll** | | Market Leader Payroll Services NEAT by NelsonHall2 | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Global payroll countries supported | 140 | Not Offered | | Managed payroll services | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | ## Super Catch-Up Contributions for Participants Age 60-63 IRS confirmed again that a plan is not required to offer participants age 60-63 the opportunity to make enhanced (or "super") catch-up contributions, as further explained below. If the plan does provide for these enhanced contributions, it must generally offer them to all participants eligible for catch-up contributions. The final regulations include exceptions to the requirement to offer them to all participants. The plan may exclude employees subject to a collectively bargained agreement (CBA) and non-resident aliens. | **Capabilities** | ![ADP](https://www.adp.com/-/media/adp/redesign2018/images/compare/competitors_features_adplogo_en.png?h=32&w=70&rev=f1867290b86d499b8396eeb222066c23&hash=B4F789675FB5346E9FB3F5AC18864035) | [Paycom1](/compare/adp-vs-paycom.aspx) | | --- | --- | --- | | **Payroll** | | Market Leader Payroll Services NEAT by NelsonHall2 | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | | Global payroll countries supported | 140 | Not Offered | | Managed payroll services | ![offered](https://www.adp.com/-/media/adp2025/ui/icn-check-thick-green.svg)offered | Not Offered | ## SIMPLE IRA Limits The [Savings Incentive Match Plan for Employees](https://www.irs.gov/retirement-plans/plan-sponsor/simple-ira-plan#:~:text=Three%20steps%20to%20set%20up,her%20SIMPLE%20IRA%20plan%20contributions.) (SIMPLE) IRA employee contribution limit for 2025 is $16,500 and the catch-up limit for those age 50 and over is $3,500. Those age 60-63 can contribute $5,250 as a "super" catch-up contribution. SECURE 2.0 increases the contribution limits for a SIMPLE plan sponsored by an employer with 25 or fewer employees to 110% of the standard limits. For those employees, the contribution limit is $17,600 and the catch-up limit is $3,850 for those age 50 and older. The final regulations clarify that a SIMPLE plan that is eligible to offer the 10% increase to the regular catch-up contribution limit may instead permit employees attaining age 60 through 63 to contribute catch-up contributions up to the super catch-up limit. A SIMPLE plan cannot simultaneously provide for both the additional 10% and the super catch-up to apply to a participant. So, for those age 60-63 in 2025, the super catch-up would remain $5,250. ## Treatment for Puerto Rico Retirement Plans There are certain provisions specific to Puerto Rico based on differences in their tax code. The Puerto Rico tax code does not permit Roth contributions and the final regulations address this conflict. The regulations provide that a plan is automatically treated as complying with SECURE 2.0's catch-up requirements if it complies with the Puerto Rico Code relating to tax-qualified retirement plans. This provision applies until the Puerto Rico Code is amended to provide for Roth contributions. | **Features** | **CT Secure Choice IRA** | **ADP 401(k)** | **ADP SIMPLE** | **ADP SEP** | | --- | --- | --- | --- | --- | | Auto Enroll | Mandatory 3% | Available | Available | N/A | | Auto Escalation | N/A | Available | N/A | N/A | | Payroll Integration | Manual via website or FTP | Full integration | Full integration | N/A | | Investment Option | Limited | Broad range of funds | 65+ options | 65+ options | | Investment Advice | N/A | Available | Available | Available | | Taxability | Roth after-tax contributions | Pretax & Roth contributions | Pretax contributions | Pretax contributions | | Annual Contribution Limit | $7,500 employee contributions + $1.1K catchup (over 50) | $24,500 employee contributions + $8,000 catchup (over 50) + optional employer contributions | $17,000 employee contributions + $4,000 catchup (over 50) + employer contributions | 25% of total compensation up to $72,000 (all employer contributions) | ## Other Notable Provisions ### h3: Cannot Make All Catch-Up Contributions Roth The final regulations state that a plan cannot make all catch-up contributions Roth. Specifically, non-high wage earners (e.g. an employee whose wages from the employer sponsoring the plan during the preceding calendar year does not exceed $145,000 (indexed annually) must have the opportunity to make catch-up contributions on a pre-tax basis. #### h4: Plans without a Roth Feature Permitted The final regulations confirm that a plan does not need to allow for Roth contributions. In that case, however, high wage earners will not be permitted to make catch-up contributions. To ensure that qualified retirement plans do not disproportionately favor highly compensated employees, the tax code establishes nondiscrimination standards that a plan can satisfy either by passing certain tests, known as nondiscrimination testing, on a regular basis or by adopting certain plan designs, known as safe harbors. The regulations include a special rule regarding plan discrimination testing in the event that a plan doesn't permit high wage earners to make any catch-up contributions. ##### h5: 403(B) and 457(B) Catch-Up Rules **Nulla consectetur velit neque, ut ultricies justo fringilla:** - Lorem ipsum dolor sit amet, consectetur adipiscing elit - Maecenas ut neque ac nisi gravida hendrerit nec ac velit - Mauris scelerisque dolor vehicula mi viverra gravida The final regulations confirm that the Roth catch-up mandate does not apply to the special catch-up contribution rules applicable to [403(b)](https://www.irs.gov/retirement-plans/irc-403b-tax-sheltered-annuity-plans#:~:text=A%20403%28b%29%20plan%20%28tax%2Dsheltered%20annuity%20plan,their%20salary%20into%20individual%20accounts.) and [457(b)](https://www.irs.gov/retirement-plans/irc-457b-deferred-compensation-plans) plans. **Nulla consectetur velit neque, ut ultricies justo fringilla:** 1. Lorem ipsum dolor sit amet, consectetur adipiscing elit 2. Maecenas ut neque ac nisi gravida hendrerit nec ac velit 3. Mauris scelerisque dolor vehicula mi viverra gravida

Scenario

Reasonable Method for Calculating

2025 Qualified Overtime

1. Individuals who are paid overtime at a rate of 1.5X their regular rate for hours worked over 40 hours in a workweek, and receive a separate accounting statement (i.e., pay statement, written statement, or other) which specifically identifies the "half" portion of the 1.5X above (the FLSA Overtime Premium) for the full 2025 year.


Individuals may use the amount provided on the separate accounting to assist in claiming the deduction on their 2025 individual tax return.

2. Individuals who are paid overtime at a rate of 1.5X their regular rate for hours worked over 40 hours in a workweek, and receive a separate accounting statement that does not separately account for the FLSA Overtime Premium, but does include an entry showing the full amount of overtime compensation including both the FLSA Overtime Premium and the individual's regular wages for hours worked over a 40-hour workweek paid during the year.


Individuals may use one-third of the full amount of overtime compensation reported on the statement to assist in claiming the deduction on their 2025 individual tax return.

3. Individuals who are paid at an overtime rate greater than 1.5X their regular rate for hours worked in excess of 40 hours in a workweek (e.g., California double time pay), and receive a separate accounting statement that specifically identifies the portion in excess of the individual's regular rate for the full 2025 year.


Individuals may approximate the FLSA Overtime Premium by multiplying the amount by an appropriate fraction (e.g., if overtime is paid at a rate of 2x the regular rate, the appropriate fraction is one-half) and use the resulting total amount to assist in claiming the deduction on their 2025 individual tax return.

4. Individuals who are paid at an overtime rate greater than 1.5X their regular rate for hours worked in excess of 40 hours in a workweek (e.g., California double time pay), and receive a statement that does not specifically identify the FLSA Overtime Premium but does include the year-to-date total of overtime paid at a rate greater than 1.5X their regular rate combined with their regular wages for the hours worked over 40 in a workweek.


Individuals may approximate the FLSA Overtime Premium by multiplying the amount by an appropriate fraction (e.g., if overtime is paid at a rate of two times the regular rate, the appropriate fraction is one-fourth) and use the resulting amount to assist in claiming the deduction on their 2025 individual tax return.

5. If the method for determining the amount of qualified overtime compensation in either scenario 2 or 4, above, would result in underestimating the individual's qualified overtime compensation. This situation could occur if an individual receives compensation (such as a nondiscretionary bonus) that increases their rate of pay for overtime compensation.


Individuals may adjust the method described in the paragraph to take the difference into account.

6. If the individual is paid overtime compensation at a rate described above but does not receive any statement covering either the entire 2025 tax year separately accounting for the FLSA Overtime Premium, the aggregate dollar amount of FLSA overtime, or the aggregate dollar amount of overtime compensation paid at a higher rate.

Individuals may use a reasonable method that takes into account:

i. the regular rate (as defined by Section 7 of the FLSA) paid to the individual by the employer or payor (or a reasonable approximation of this amount); and


ii. the individual's hours of service in excess of 40 hours in a workweek (or a reasonable approximation if the individual does not have records of actual hours of service) for purposes of determining the amount of qualified overtime compensation.

A reasonable method includes requesting information from the employer or payor and using the information provided to calculate the deduction.

7. If an employer or payor satisfies the requirements under Section 7 of the FLSA by operation of a special exception (including, but not limited to, public sector employees in fire protection and law enforcement, employees of a political subdivision of a State or an interstate governmental agency who receive compensatory time off in lieu of cash, and employees of hospitals or certain residential care facilities).


Individuals must compute the amount of overtime compensation by operation of the different qualifying federal overtime rules used in the relevant exception that apply to the individual and may use any reasonable method contained in the Notice that takes those alternative overtime rules into account.

## Final Regulations Effective Date The Roth Catch-Up Requirement is required to be implemented as of January 1, 2026. However, until January 1, 2027, a reasonable, good faith interpretation standard applies regarding administration and operation of the Roth catch-up requirement. Plan sponsors should consult with legal counsel as needed to help determine what might be considered a good faith interpretation. Later applicability dates are provided for plans maintained under a CBA and certain governmental plans. As always, ADP will continue to keep you informed regarding any future related developments. ## ADP Compliance Resources ADP maintains a staff of dedicated professionals who carefully monitor federal and state legislative and regulatory measures affecting employment-related human resource, payroll, tax and benefits administration, and help ensure that ADP systems are updated as relevant laws evolve. For the latest on how federal and state tax law changes may impact your business, visit the ADP _Eye on Washington_ Web page located at [www.adp.com/regulatorynews](https://www.adp.com/regulatorynews). ADP is committed to assisting businesses with increased compliance requirements resulting from rapidly evolving legislation. Our goal is to help minimize your administrative burden across the entire spectrum of employment-related payroll, tax, HR and benefits, so that you can focus on running your business. This information is provided as a courtesy to assist in your understanding of the impact of certain regulatory requirements and should not be construed as tax or legal advice. Such information is by nature subject to revision and may not be the most current information available. ADP encourages readers to consult with appropriate legal and/or tax advisors. Please be advised that calls to and from ADP may be monitored or recorded. If you have any questions regarding our services, call 855-466-0790. ADP, Inc. One ADP Boulevard, Roseland, NJ 07068 adp.com Updated on October 1, 2025 Tags - [regulatory](/spark/tags?tag=regulatory&id=cf3acb84-000b-4e45-ba53-fd8d2882c16b) - [Compensation and Benefits](/spark/tags?tag=compensation+and+benefits&id=c26afad7-5572-4944-87b1-95a520f162e6) - [Risk and Compliance](/spark/tags?tag=risk+and+compliance&id=6d76899f-4560-4569-874c-b7f926c0e2cc) - [Workers' Compensation](/spark/tags?tag=workers%27+compensation&id=7eae7288-3ee0-4a66-8657-3acc613013b3) - [Large Business](/spark/tags?tag=large+business&id=da8875ac-7465-4bcf-806e-5dd75b0f0281) - [Midsize Business](/spark/tags?tag=midsize+business&id=ed5f006b-9890-489d-af6b-c51fa913d56a) - [Multinational](/spark/tags?tag=multinational&id=c39754fa-0694-4912-bd0b-6f890934cba3) - [Small Business](/spark/tags?tag=small+business&id=ee8af402-30fe-4e17-a237-de495c06060f) Subscribe to SPARK updates Stay in the know on the latest workforce trends and insights. 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