As previously discussed, the SECURE 2.0 Act of 2022 (“SECURE 2.0”) was signed into law on December 29, 2022 as part of the 2023 Consolidated Appropriations Act, and included a myriad of required and optional plan design changes for retirement plan sponsors and employers (described in more detail here). After a closer read, several
Catch-Up Contributions
IRS Offers Two-Year Transition Period to Implement SECURE 2.0 Roth Catch-Up Requirement
By Jennifer Rigterink & Jay Jensen on
On Friday, the IRS released Notice 2023-62, which addresses certain pressing implementation issues related to the SECURE 2.0 requirement that catch-up contributions for participants with FICA wages of more than $145,000 during the prior calendar year from the employer maintaining the plan must be made on a Roth basis.
In welcome news for plan sponsors, the guidance announces a two-year “administrative transition period” for implementation of this requirement, which was otherwise set to take effect on January 1, 2024. The notice confirms that, despite a drafting quirk in the SECURE 2.0 statute which suggested that catch-up contributions would be discontinued after 2023, catch-up contributions will continue to be available. The notice also outlines future guidance that Treasury and the IRS intend to issue on other Roth catch-up requirement topics.