Amid Uncertainty, IRS Delays Roth Catch-Up Contribution Requirements

On August 25, 2023, the IRS issued Notice 2023-62, announcing a two-year “administrative transition period” that effectively delays until at least 2026 the implementation deadline of the Roth catch-up contribution provisions under SECURE Act 2.0.

Under SECURE Act 2.0, and beginning January 1, 2024, catch-up contributions made to a qualified retirement plan were required be made as Roth contributions for all employees with earnings of $145,000 or more.  Under IRS Notice 2023-62, however, all catch-up contributions made during the administrative transition period will be deemed to satisfy the requirements of SECURE Act 2.0, even if catch-up contributions made for high-wage earners (that is, those employees earning $145,000 or more) are not made as Roth contributions.

From the outset, SECURE Act 2.0’s “Rothification” of certain employees’ catch-up contributions has begged more questions than answers, and employers and plan administrators were left with little clarity on how to effectively administer these requirements.  The IRS has seemingly recognized the need for further guidance on these issues and has requested comments on the future interpretation of these rules through October 24, 2023.  For now, employers and plan administrations can rest easy on this issue for at least two more years until such further guidance is issued.