IRS Delays SECURE 2.0 Roth Catch-Up Enforcement
On August 25, 2023, the Internal Revenue Service issued Notice 2023-62 providing guidance on Section 603 of SECURE
2.0. The Notice provides an administrative transition period until January 1, 2026, to the requirement stating catch-up contributions for individuals with FICA compensation in excess of $145,000 be made in the form of a Roth contribution.
Per the Notice, until taxable years beginning after December 31, 2025, catch-up contributions will be treated as satisfying the requirements of Section 603 of SECURE 2.0, even if the contributions are not designated as Roth contributions, and a plan does not provide for designated Roth contributions will be treated as satisfying the requirements of Section 603 of SECURE 2.0.
The news is a welcome relief and will allow critically important time for all stakeholders involved – plan sponsors, payroll providers, and recordkeepers – to operationalize the requirement. The delay will also provide the Department of the Treasury and IRS adequate time to draft additional guidance addressing the open questions.