SECURE 2.0 Payroll Integration: What Payroll Companies and Recordkeepers Need to Know

SECURE 2.0 (the Securing a Strong Retirement Act of 2022) changed the rules for catch-up contributions. Starting January 1, 2026, participants earning $145,000+ in prior-year FICA wages must make catch-up contributions as Roth. This requires payroll systems to send prior-year Social Security wages to recordkeepers so they can determine mandatory Roth designation. Additionally, a new "super catch-up" for ages 60–63 ($11,250 for 2026) requires additional age-range designation fields.

The super catch-up contribution limit for participants aged 60–63 is $11,250 for 2026 — compared to the standard catch-up limit of $7,500 for participants age 50+. This higher limit applies specifically to the 60–63 age range and requires an explicit designation flag in the payroll-to-recordkeeper data stream so the recordkeeper can validate the higher contribution limit.

If prior-year Social Security wages are not included in the payroll-to-recordkeeper data stream, the recordkeeper cannot determine whether a high earner's catch-up contribution must be designated as Roth. The contribution may be rejected, processed as pre-tax incorrectly, or flagged for manual review. Incorrectly designated catch-up contributions are not deductible to the participant and the plan may face IRS correction procedures.

The IRS issued final Roth catch-up regulations in September 2025 (T.D. 10004), effective January 1, 2026. The final regulations clarify that the $145,000 threshold is based on FICA wages from the preceding calendar year, and that plans using a payroll aggregator must ensure the aggregator passes the correct prior-year FICA wages field.

Yes. PayKonnect updated its integration layer in December 2025, ahead of the January 1, 2026 effective date. The update is confirmed by Empeon's December 2025 release notes for their PayKonnect 401(k) integration, which added prior-year and YTD Social Security wages to the integration output.

SECURE 2.0 Section 101 requires new 401(k) plans to automatically enroll participants at a 3% deferral rate, escalating to 10–15%. Auto-enrollment increases the volume of deferral elections flowing through 360° return data, because initial auto-enrollment elections must flow from the recordkeeper back to the payroll system. Without 360° integration, this requires manual intervention for every new auto-enrolled participant.