IRS Delays Roth Catch-Up Requirement for Certain Higher-Paid Employees
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Our August 24, 2023 blog post “Retirement Plans:  Will January 1, 2024 Effective Date for Age 50 Catch-Up Contribution Changes Be Delayed?,” discussed the new catch-up contribution rule and options for keeping retirement plans tax-compliant. Since then, the IRS has delayed enforcement of the Roth Catch-Up Requirement for certain higher-paid employees.

The IRS recently issued Notice 2023-62, which provides Plan Sponsors with a transition period until 2026 to implement the Roth catch-up contribution feature under new Internal Revenue Code Section 417(v)(7). The Notice provides that the first two taxable years beginning after December 31, 2023, will be regarded as an administrative transition period with respect to the requirement that catch-up contributions made on behalf of certain eligible higher-paid participants be designated as Roth contributions.

More precisely, during the transition period (2024 and 2025):

  1. catch-up contributions by participants whose wages exceeded $145,000 (indexed) in the preceding year will be treated as satisfying the requirements of Code section 414(v)(7)(A), even if the contributions are not designated as Roth contributions, and
  2. a plan that does not allow for designated Roth contributions will be treated as satisfying the requirements of section 414(v)(7)(B) (offering the Roth feature to all participants).

If you have any questions concerning the SECURE 2.0 Act Roth Catch-Up requirements, please contact any member of our Employee Benefits practice group.

Posted in IRS, Retirement

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