Good News! IRS Delays Implementation of SECURE 2.0 Roth Catch-Up Contribution Rules Until 2026
Due to extensive pressure from employers and plan recordkeepers, the IRS announced a delay in the $145,000 Roth catch-up rule.
As you may recall, SECURE 2.0 (enacted at the end of 2022) requires catch-up contributions on behalf of eligible employees who had at least $145,000 in Medicare eligible wages for the prior year to be contributed on a Roth basis beginning on January 1, 2024. Plan sponsors and recordkeepers have been scrambling to figure out how to revise systems to deal with this mandate.
On Friday August 25, 2023, the IRS released Notice 2023-62 (available here), which announced a 2-year administrative transition period with respect to this requirement. This means that plans will have until December 31, 2025 to revise the plan and payroll systems to enable compliance with this mandate.
Request for Comments
The IRS also requests comments regarding implementation challenges that have been identified. If you have particular concerns about how the $145,000 catch-up standard will apply, contact your Vorys employee benefits attorney.