IRS Delays Roth Catch-Up Contribution Requirement under SECURE 2.0 Act


In light of concerns expressed by plan sponsors and participants alike, the IRS released Notice 2023-62 (“Notice”) which provides a two-year extension on the requirement related to Roth catch-up contributions under SECURE 2.0 Act (“the Act”). Specifically, the Notice states, “The Department of Treasury and the IRS have been made aware of taxpayer concerns with being able to timely implement section 603 of the SECURE 2.0 Act. The administrative transition period described in this notice is intended to facilitate an orderly transition for compliance with that requirement.” Under the Act, all catch-up contributions, e.g., additional contributions permitted for participants aged 50 or older, made to 403(b), 457(b), or 401(k) plans by an employee who earned over $145,000 during the prior year must be made as an after-tax Roth contribution. Initially, this requirement was effective for tax years beginning after December 31, 2023; however, in light of the Notice, plan sponsors and participants will have until January 1, 2026, to comply.

While the extension is in place, participants with prior year compensation exceeding $145,000 will be able to continue catch-up contributions on a pre-tax basis through the plan year starting in 2025, and plan sponsors are not required to treat those participants’ catch-up contributions as Roth contributions. Further guidance around this provision, and others within the Act is anticipated. This guidance will include:

  • Clarification for participants who did not receive wages from the plan sponsor in the prior year,
  • Clarification around whether the plan sponsor would be permitted to treat an election by a participant to make catch-up contributions on a pre-tax basis as an election to make catch-up contributions that are designated Roth contributions, and
  • Clarification for plans sponsored by more than one employer, including multiemployer plans, and how eligible participants’ earned wages should be treated for the purpose of determining whether they meet the $145,000 threshold.

Plans and plan sponsors wishing to submit comments to the Treasury Department and IRS have until October 24, 2023, to do so either electronically or by mail.

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