Applies to: Basic Payroll, Full Service Payroll Employers who offer a 401(k), 403(b), or 457(b) deduction in Patriot Software payroll and have employees age 50 or older.
As of January 1, 2026, the SECURE 2.0 Act requires high-earning employees age 50 and older to make all catch-up contributions as after-tax Roth contributions instead of pre-tax contributions. This article explains which employees the Roth catch-up rule affects, how to set up Roth catch-up deductions in Patriot Software, and what to do if an employee contributes to both a pre-tax and a Roth deduction at the same time.
Which employees the Roth catch-up rule applies to
The Roth catch-up rule applies to an employee when both of the following are true:
The employee is age 50 or older by December 31 of the current year.
The employee's Social Security wages (Form W-2, box 3) from your business for the prior calendar year were more than the IRS high-earner threshold (example: $150,000 for 2026, based on 2025 wages). The IRS adjusts the threshold for inflation each year.
The high-earner test looks back one calendar year only, and each year is a new test:
Only Social Security wages from your business count. Wages the employee earned from other employers do not count.
An employee with no Social Security wages from your business in the prior year, such as an employee hired this year, is not subject to the Roth catch-up rule this year.
An employee who was over the threshold one year and under it the next is not subject to the Roth catch-up rule in the second year.
Employees who meet both conditions can still make catch-up contributions, but every catch-up dollar must be a Roth (after-tax) contribution. Employees who don't meet both conditions can continue making catch-up contributions as pre-tax or Roth, based on their election.
2026 IRS Employee contribution limits
Limit | 2026 amount |
Standard employee deferral limit (pre-tax and Roth combined) | $24,500 |
Catch-up limit, ages 50–59 and 64+ | $8,000 |
Super catch-up limit, ages 60–63 | $11,250 |
Total limit, ages 50–59 and 64+ | $32,500 |
Total limit, ages 60–63 | $35,750 |
The $24,500 standard limit is not a catch-up amount. Catch-up contributions are the contributions(in the software we call these deductions)an employee makes after reaching the $24,500 standard limit.
Annual additions limit: The IRS limits the combined total of employee deferrals and employer contributions for each employee to $72,000 for 2026, or 100% of the employee's pay if less. Catch-up contributions don't count toward the annual additions limit. Patriot Software does not track or enforce the annual additions limit. Your plan administrator or plan provider is responsible for monitoring the annual additions limit, including any employer contributions made outside of Patriot Software payroll. To keep employer contributions processed through payroll within the annual additions limit, you will need to set an annual limit on the employer contribution in the payroll software.
About the "Requires Roth Catch-up Rule" Setting
Requires Roth Catch-up is an employee-level setting on the employee's Deductions & Contributions page. Payroll > Employee list> {Employee name} Deductions and Contributions tab. The setting is located between the Employee deductions and Employer contributions sections.
Turn on Requires Roth Catch-up for every employee the Roth catch-up rule applies to.
When Requires Roth Catch-up is on, Patriot Software stops the employee's pre-tax 401(k), 403(b), or 457(b) deduction once the employee's contributions reach the standard limit ($24,500 for 2026). This keeps the employee's catch-up contributions from being taken as pre-tax.
Patriot Software counts both the employee's pre-tax and Roth deductions toward the $24,500 limit. If the employee contributes to a pre-tax deduction and a Roth deduction at the same time, the pre-tax deduction stops when the two deductions combined reach $24,500. Learn more
Recommended Setup for "Required Roth Catch-up Contributions"
The recommended setup is to let the employee's pre-tax deduction reach the standard limit first, if your plan allows it, then add the Roth catch-up deduction.
With this setup, the employee's pre-tax deduction reaches the full $24,500, and Requires Roth Catchup stays on all year.
Step 1: Identify high earners at the start of the year
Review your employees with a 401(k), 403(b), or 457(b) deduction.
Identify employees who will be age 50 or older by December 31 and whose prior-year Social Security wages from your business were more than the IRS high-earner threshold ($150,000 for 2026, based on 2025 wages).
Let each of these employees know that once they reach the standard limit, their catch-up contributions must be Roth.
Step 2: Turn on Requires Roth Catch-up Rule for each high earner
Go to Payroll > Employee List > [Employee Name].
Click Deductions & Contributions.
Toggle Requires Roth Catch-up Rule on.
Click Save.
Step 3: Watch for the employee to reach the standard limit
Patriot Software stops the employee's pre-tax deduction automatically when the employee reaches the IRS limit for the year.
Review the employee's year-to-date (YTD) pre-tax total on each payroll so you know when the employee reaches the IRS limit and is ready for the Roth catch-up deduction.
Step 4: Add a Roth employee deduction at the company level
Skip Step 4 if your company already has an active Roth deduction for the plan.
Go to Settings > Payroll Settings > Deductions & Contributions.
Click Add Deduction.
Select the Deduction Type: Roth 401(k), Roth 403(b), or Roth 457(b).
Enter a Description, such as "Roth Catch-Up."
Click Save.
Step 5: (Optional) Add a Roth employer contribution (only if your plan matches catch-up contributions)
Skip Step 5 if your retirement plan does not match catch-up contributions.
Go to Settings > Payroll Settings > Deductions & Contributions.
Click Add Contribution.
Select the Contribution Type: Roth 401(k), Roth 403(b), or Roth 457(b).
Enter a Description, such as "Roth Catch-Up Employer."
In the For Deduction drop-down, select the Roth catch-up deduction from Step 4. Patriot Software then adds the employer contribution only on paychecks that include the Roth catch-up deduction.
Select how the contribution is calculated: flat amount, single formula, tiered formula, or percentage of pay.
Enter the contribution amount or formula. You can override a flat amount for individual employees.
Click Save.
Step 6: Assign the Roth catch-up deduction to the employee
Assign the Roth catch-up deduction starting with the first paycheck after the employee reaches the $24,500 standard limit.
Go to Payroll > Employee List > [Employee Name].
Click Deductions & Contributions.
Click Add New Deduction and select the Roth catch-up deduction.
Enter the Method (Fixed Dollar or % of Gross) and the Amount.
Under Catch-Up, select Yes: 50+ or Yes: 60-63, based on the employee's age.
Click Save.
If you created a Roth employer contribution in Step 5, click Add New Contribution, select the Roth employer contribution, and click Save.
Patriot Software withholds the Roth catch-up deduction as an after-tax contribution until the employee reaches the catch-up limit ($8,000 for ages 50–59 and 64+; $11,250 for ages 60–63, but you must have the correct setting enabled).
If an employee contributes to pre-tax and Roth at the same time
Your retirement plan decides whether pre-tax can reach the full IRS limit for the year.
IRS rules allow retirement plans to choose between two methods for high earners. Your retirement plan document, or your plan administrator, tells you which method your plan uses.
Combined method: Pre-tax and Roth contributions both count toward the $24,500 limit. Once the two combined reach $24,500, all further contributions must be Roth. This is how Patriot Software calculates the limit when Requires Roth Catchup is on.
Pre-tax-only method: Only pre-tax contributions count toward the $24,500 limit. The pre-tax deduction can reach the full $24,500 even if the employee contributed to Roth earlier in the year. Only contributions above $24,500 must be Roth.
Example: An employee age 61 has contributed $18,000 pre-tax and $6,750 Roth so far in 2026, a combined total of $24,750. The employee's total limit is $35,750.
If your plan doesn't allow all of the 401k to be pretax, or your employee chooses to contribute to a pre-tax deduction and a Roth deduction on the same paychecks all year, instead of waiting to start the Roth deduction until reaching $24,500.
How Patriot Software calculates the limit when Requires Roth Catchup Rule is on
When Requires Roth Catchup is on and the employee has a pre-tax deduction and a Roth deduction running at the same time, Patriot Software counts both deductions toward the $24,500 standard limit. Patriot Software stops the pre-tax deduction when the two deductions combined reach $24,500, so the pre-tax deduction alone may never reach $24,500.
| Combined method (Requires Roth Catchup on) | Pre-tax-only method (Requires Roth Catchup off) |
Remaining pre-tax contributions | $0 (pre-tax stops at $18,000) | $6,500 (pre-tax reaches $24,500) |
Remaining Roth contributions | Up to $11,000 | $4,500 (Roth reaches $11,250) |
Total for the year | $35,750 | $35,750 |
How to set run both pretax and post tax deductions when your plan allows the pre-tax-only method
Follow these steps only if your retirement plan allows the pre-tax-only method. Check with your plan administrator first.
Go to Payroll > Employee List > [Employee Name].
Click Deductions & Contributions.
Toggle Requires Roth Catch-up Rule off.
Leave the Catch-Up setting on for both deductions (Yes: 50+ or Yes: 60-63, based on the employee's age). Do not turn off the Catch-Up setting on the deductions. Only Requires Roth Catchup is turned off. Turning off Catch-Up caps the employee at the $24,500 standard limit, which stops the employee's Roth catch-up contributions.
On the pre-tax deduction, set the annual limit to the current-year standard limit.($24,500 for 2026).
On the Roth deduction, set the annual limit to the employee's catch-up limit as defined by the IRS for the year. ($8,000 for ages 50–59 and 64+, or $11,250 for ages 60–63, for 2026).
Click Save.
Review year-to-date totals when Requires Roth Catch-up is off
When Requires Roth Catch-up Rule is off, Patriot Software does not stop the pre-tax deduction at the combined limit or move contributions above the IRS limit to Roth. Before the last payroll of the year, review the employee's YTD totals to confirm:
The employee's pre-tax contributions are at or below the IRS limit
Every contribution above the IRS limit was made as a Roth contribution.
At the start of each year: inactivate the Roth catch-up deduction
Each January, the employee's contribution limits reset, and the employee's pre-tax deduction should again reach the standard limit before Roth catch-up contributions begin. If your employees do not otherwise contribute to Roth, inactivate the Roth catch-up deduction at the start of each year.
Go to Settings > Payroll Settings > Deductions & Contributions.
Click Edit in the row of the Roth catch-up deduction.
Uncheck Active.
Patriot Software shows a warning that inactivating the deduction inactivates it for every employee who has it. Click Yes.
Click Save.
Reactivate the Roth catch-up deduction at the company level, and on each employee, once the employee reaches the standard limit for the new year.
Also review Requires Roth Catchup Rule for each employee each January. An employee's prior-year wages determine whether the Roth catch-up rule applies, so the list of affected employees can change from year to year.
Frequently asked questions about Roth catch-up contributions
Q: Why did my employee's pre-tax 401(k) deduction stop before reaching $24,500?
A: An employee's pre-tax 401(k) deduction stops before $24,500 when Requires Roth Catch-up Rule is on and the employee also has a Roth deduction at the same time. Patriot Software counts both the pre-tax and Roth deductions toward the $24,500 standard limit, so the pre-tax deduction stops when the two deductions combined reach $24,500. If your retirement plan allows the full $24,500 to be pre-tax, you can turn off Requires Roth Catch-up. See the section "If an employee contributes to pre-tax and Roth at the same time" in this article.
Q: Is the combined limit an IRS rule or a Patriot Software limitation?
The combined limit is one of two methods IRS rules allow for high earners subject to the Roth catch-up rule. Under the combined method, pre-tax and Roth contributions count together toward the total IRS limit.
Under the pre-tax-only method, only pre-tax contributions count toward $24,500. Patriot Software uses the combined method when Requires Roth Catchup Rule is on. Your retirement plan document determines which method applies to your plan.
Q: My employee contributes to pre-tax and Roth at the same time. Should Requires Roth Catch-up Rule stay on?
It depends on if your retirement plan uses the pre-tax-only method. Your retirement plan document decides which method applies, not the employee's preference. Check with your plan administrator.
If your plan uses the combined method: Leave Requires Roth Catchup on. The employee's pre-tax deduction stopping before $24,500 is correct for your plan, and the employee's remaining contributions for the year must be Roth.
If your plan uses the pre-tax-only method: You can turn off Requires Roth Catchup so the pre-tax deduction can reach $24,500. With Requires Roth Catchup off, Patriot Software no longer enforces the Roth catch-up rule for that employee, so you need to review the employee's YTD totals to confirm pre-tax contributions stay at or below $24,500 and every contribution above $24,500 is Roth.
If the employee contributes only to a pre-tax deduction, or you follow the recommended setup and add the Roth catch-up deduction after the employee reaches the IRS yearly limit, leave Requires Roth Catchup Rule on.
Q: Should I turn off the Catch-Up setting on the employee's deductions?
A: The Catch-Up setting on the employee's deductions should stay on. Catch-Up and Requires Roth Catchup Rule are two different settings:
Catch-Up (on each deduction) lets the employee contribute above the $24,500 standard limit, up to $32,500 for ages 50–59 and 64+, or $35,750 for ages 60–63. Turning off Catch-Up caps the employee at $24,500 and stops the employee's Roth catch-up contributions.
Requires Roth Catchup (on the employee) counts the pre-tax and Roth deductions together toward $24,500. Requires Roth Catchup is the only setting you turn off, and only if your retirement plan uses the pre-tax-only method.
Q: Do I need to edit past payrolls if my employee's pre-tax deduction stopped early?
You don't need to edit past payrolls when an employee's pre-tax deduction stopped early because of the combined limit. The Roth deductions already withheld stay as Roth. To let the pre-tax deduction resume, turn off Requires Roth Catchup Rule (only if your plan allows the pre-tax-only method) and adjust the remaining pre-tax and Roth amounts so the employee reaches the limits by year-end. Turning off Requires Roth Catch-up Rule does not change payrolls you already processed.
Q: What annual limits should I enter on the pre-tax and Roth deductions?
For 2026, enter these annual limits on the pre-tax and Roth deductions:
Pre-tax 401(k), 403(b), or 457(b) deduction: $24,500.
Roth catch-up deduction: $8,000 for employees age 50–59 or 64+, or $11,250 for employees age 60–63.
Q: Does Patriot Software track the employer contribution annual additions limit?
A: Patriot Software does not track or enforce the IRS annual additions limit, which caps the combined total of employee deferrals and employer contributions at $72,000 for 2026, or 100% of the employee's pay if less.
Catch-up contributions don't count toward the annual additions limit.
To keep employer contributions processed through payroll within the annual additions limit, set an annual limit on the employer contribution in Patriot Software.
Q: Do I need to set up a Roth employer contribution?
A: A Roth employer contribution is needed only if your retirement plan matches employees' catch-up contributions. If your plan does not match catch-up contributions, set up only the Roth employee deduction.
Q: When should I add the Roth catch-up deduction to an employee?
A: Add the Roth catch-up deduction starting with the first paycheck after the employee's pre-tax contributions reach the standard limit ($24,500 for 2026). If you Add the Roth catch-up deduction earlier, while Requires Roth Catch-up Rule is on, the payroll software will count the both Roth deductions toward $24,500 and stop the pre-tax deduction early.
Q: Which employees need Requires Roth Catch-up Rule turned on?
Turn on Requires Roth Catchup Rule for each employee who is age 50 or older by December 31 and whose Social Security wages from your business in the prior calendar year were more than the IRS high-earner threshold ($150,000 for 2026, based on 2025 wages). Review this list every January, because the high-earner test uses only the prior year's wages, and the IRS adjusts the threshold for inflation each year.