IRS Delays Mandatory Roth Catch-Up Contributions for Higher Paid Employees
Highlights
The IRS provided a two-year administrative transition period delaying the required implementation of the SECURE 2.0 Act’s rule mandating high-paid participants to designate catch-up contributions as Roth contributions, which previously needed to be implemented in 2024
Plans may continue to offer or not offer designated Roth contributions and catch-up contributions without the new Roth catch-up contribution requirement applicable to high-paid participants until 2026
The IRS intends to issue future guidance on implementing the required Roth catch-up contribution for high-paid participants
The Internal Revenue Service (IRS) has issued guidance in Notice 2023-62 delaying the mandatory Roth IRA catch-up contribution requirement for high-paid participants until 2026. The SECURE 2.0 Act (Consolidated Appropriations Act, 2023) required plan participants earning over $145,000 in prior-year FICA wages to designate any catch-up contributions as Roth contributions beginning in 2024. In essence, this new rule prohibited high-income earners, ages 50 and over, from making catch-up contributions as pre-tax contributions.
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