The SECURE 2.0 Act introduced operational changes to catch-up contributions for employer-sponsored retirement plans, including enhanced “super catch-up” limits for certain employees and mandatory Roth treatment for higher earners. While these provisions are now in effect, nonprofit organizations remain ultimately responsible for proper plan administration, even when third-party vendors are involved. Leadership should proactively review payroll processes, plan provisions, vendor coordination, and internal controls to ensure compliance and reduce governance risk.
Recent changes under the SECURE 2.0 Act have modified how catch-up contributions to employer-sponsored retirement plans are administered. While these rules are now in effect, many nonprofit leaders may not have revisited their payroll and retirement plan processes to confirm how the changes apply to their organization.
Because these updates are operational in nature and implemented through payroll and plan administration, they can easily be overlooked, particularly when third-party providers are involved. However, responsibility for proper plan operation ultimately remains with the nonprofit organization.
This article provides a reminder of the key changes related to catch-up contributions, clarifies organizational responsibility, and outlines practical steps nonprofit leaders should consider to ensure compliance and sound governance.
What Changed Under SECURE 2.0?
SECURE 2.0 introduced two related but distinct changes to catch-up contributions. While the provisions are connected, they should be evaluated separately by nonprofit organizations.
Increased “Super Catch-Up” Limits for Certain Employees
SECURE 2.0 allows retirement plans to offer enhanced catch-up contribution limits, often referred to as the “super catch-up” for employees who are ages 60 through 63, if the plan has adopted this optional feature.
Key points for nonprofit leaders:
- Adoption of the super catch-up is optional and depends on plan design.
- The increased limit applies only to employees within the specified age range.
- Organizations should confirm whether their plan has adopted this feature and how it is administered.
Beginning in 2026, if an employee is subject to the mandatory Roth catch-up rule, any super catch-up contributions must also be made as Roth contributions.
Mandatory Roth Treatment for Certain Catch-Up Contributions
SECURE 2.0 requires that catch-up contributions be treated as Roth (after-tax) contributions for employees who:
- Are age 50 or older, and
- Earned more than $150,000 in prior-year wages from the organization (based on FICA wages).
Important clarifications:
- This requirement applies only to the catch-up portion of contributions.
- Employees may continue to make pre-tax deferrals up to the standard annual limit.
- The rule applies to both 401(k) and 403(b) plans, which are common among nonprofit organizations.
All catch-up contributions required to be Roth, including any super catch-up contributions, if the plan has adopted that feature it must be treated as Roth for employees who meet the wage threshold.
Why This Matters for Nonprofit Organizations
While these changes are implemented through payroll and plan administration systems, they directly affect how retirement plans are operated on a day-to-day basis. For nonprofit organizations, many of which rely on multiple third-party vendors, this creates a shared process with several handoff points.
Outsourcing administration does not transfer responsibility. Even when payroll companies, recordkeepers, or plan administrators perform the mechanics, the nonprofit organization remains the plan sponsor and is ultimately responsible for:
- Identifying employees subject to the catch-up rules,
- Ensuring payroll elections are applied correctly,
- Operating the plan in accordance with its terms, and
- Maintaining appropriate oversight and internal controls.
If errors occur, regulators and auditors look first to the organization, not the service providers.
Steps Nonprofit Leaders Should Consider
1. Identify Employees Who May Be Impacted
Organizations should confirm which employees:
- Are age 50 or older (and separately, ages 60–63 if applicable), and
- Exceeded the wage threshold in the prior year.
This determination directly affects how catch-up contributions must be treated and should be revisited annually.
2. Review Plan Provisions and Policies
Confirm that:
- The retirement plan permits Roth contributions,
- Catch-up contribution provisions align with current rules,
- Any optional features, such as the super catch-up, have been formally adopted,
- Required plan amendments have been completed.
If Roth contributions are not permitted under the plan, impacted employees may be unable to make catch-up contributions at all.
3. Confirm How Payroll and Plan Vendors Are Administering the Rules
Leadership should communicate directly with payroll providers and plan administrators to understand:
- How impacted employees are identified,
- How catch-up and super catch-up contributions are classified in the system,
- Whether system limitations exist based on election types,
- How errors or corrections are handled if they occur.
Clear alignment between vendors is critical.
4. Update Employee Communications as Needed
Organizations should ensure that:
- Enrollment and change forms reflect current rules
- Impacted employees understand how catch-up contributions are treated
- HR and finance staff are prepared to answer questions at a high level
Targeted communication can help avoid confusion and incorrect elections.
5. Consider Adding Simple Monitoring Controls
From a governance perspective, organizations may wish to implement basic oversight procedures, such as:
- Periodic review of catch-up contributions for impacted employees
- Confirmation that contributions are properly classified as Roth
- Documentation of vendor confirmations and processes
These controls need not be complex, but they help demonstrate oversight and reduce compliance risk.
Final Thoughts
SECURE 2.0 updates to catch-up contributions, including the super catch-up feature and mandatory Roth treatment for certain employees, represent meaningful operational changes for nonprofit organizations. While much of the implementation occurs through third-party vendors, responsibility for proper operation remains with the organization.
Nonprofit leaders who proactively confirm how these rules are being applied are better positioned from both a compliance and governance standpoint.
While this article focuses specifically on the catch-up contribution provisions of SECURE 2.0, the legislation introduced a wide range of additional changes affecting employer-sponsored retirement plans. Organizations should work with their advisors and service providers to ensure they understand and have addressed all applicable SECURE 2.0 provisions, not just those related to catch-up contributions.
At Han Group, we work closely with nonprofit leaders to interpret regulatory changes, assess operational readiness, and strengthen internal controls. To learn more about how Han Group can support your organization, Contact Us.
