In this series of articles, we explore the implications of SECURE 2.0’s changes to catch-up contributions and how employers should respond.
Yahoo! Let’s celebrate—the IRS gave us more time!
On August 25, 2023, the Internal Revenue Service (IRS) announced an administrative transition period that effectively delays the deadline for adding Roth catch-up contributions under the SECURE 2.0 Act until at least 2026. Specifically, the announcement provides that, until 2026, catch-up contributions will satisfy the requirements under SECURE 2.0, even if the contributions made for high-wage earners (i.e., those making more than $145,000 from their employer in the prior year) are not designated as Roth contributions.
This welcome announcement is expected to generate universal celebration and a collective sigh of relief across the entire retirement industry, where concerns have been mounting for months about the ability of employers and their providers to successfully implement this change by 2024. Many issues still need to be addressed before employers can operationalize this new plan feature, and the IRS is accepting comments on those issues through October 24, 2023. But for today, at least, it’s a celebration, and we’re going to celebrate your party with you.
For any questions regarding SECURE 2.0 changes (or suggestions for our SECURE 2.0 music playlist), please contact your regular McDermott lawyer or one of the authors.