Check the prior-year wage file for Roth catch-up contributions

The Roth catch-up review uses a prior-year wage measure, so the payroll file needs two clearly labeled years. For the 2026 rule described by the IRS, affected participants are identified using the applicable 2025 wages with the plan sponsor. Current salary, household income and a manager's compensation estimate are different measures.

Ask the plan administrator to confirm the applicable plan, participant eligibility and wage threshold for the contribution year. For 2026, the IRS guidance identifies prior-year wages exceeding $150,000, using the relevant wages paid in 2025. Use the rule for the year being processed rather than carrying that amount into later years without verification.

The final regulations have general applicability beginning after 2026, with additional applicability provisions. That does not make the statutory 2026 Roth catch-up requirement disappear. Obtain the administrator's documented implementation approach for the actual year and plan.

Obtain the prior-year payroll wage file and identify the wage definition required by the rule. Do not substitute total compensation used for another plan test. Ask the administrator how to handle corrections, new employees and any employer-aggregation circumstances relevant to the plan.

Compare the file with final payroll reporting and include accepted corrections. A midyear provider migration can leave a new system with only part of the prior year's history. Preserve the source reports and the reconciliation showing that the participant's relevant wages are complete.

Keep age-based catch-up eligibility separate from the wage-based Roth requirement. One file establishes whether a participant can make catch-up contributions; another part of the review determines the required tax character. Combining them into an undocumented 'high earner' flag makes later questions difficult to resolve.

Ask payroll and the administrator to explain how contributions become catch-up contributions under the plan's process and how Roth coding will be applied. Identify which system controls the classification. A payroll deduction code and a recordkeeper contribution source must describe the same treatment.

Use a controlled preview for an affected participant approaching the applicable deferral limit. Check taxable wages, the contribution source sent to the recordkeeper and the employee's net pay. Confirm that the process follows the plan's elections, notices and approved implementation rather than an operator's manual assumption.

Document what happens when a prior-year wage correction changes a participant's classification. The administrator should specify the required correction, if any, and its timing. Do not reverse retirement-account entries or recode historical contributions without that review.

Save the wage-source reconciliation, participant classification and administrator instructions for the contribution year. Restrict access to employee compensation details. A general finance summary can show that the review was completed without exposing individual retirement elections.

Track unresolved participants explicitly, including missing prior-provider wages or inconsistent employee records. Give each exception an owner and a decision date before affected contributions are processed. A default setting should not conceal a missing factual determination. Ask the administrator to approve the handling of participants whose prior-year wage data changes after the initial classification, and preserve both the original result and the revised decision.

After the first affected contribution, compare payroll and recordkeeper results with the approved treatment. Repeat the annual wage review for the next contribution year using the then-applicable rules and limits. The retained record should explain why each participant received a particular treatment in a particular year.