September 1, 2023 - New Roth Catch-up Rule Delayed Until 2026

Matthew Cuplin |

The IRS announced a two-year administrative transition period that delays the implementation of the Roth catch-up contribution requirement for high-income participants in retirement plans until 2026. The transition period is included in Notice 2023-62 and is designed to facilitate an orderly transition for compliance with the catch-up requirement for participants in 401(k)s and similar retirement plans that was included in the SECURE 2.0 Act of 2022. Additionally, the announcement clarified that plan participants who are 50 or older can continue making catch-up contributions after 2023, regardless of their income.

Under §603 of the SECURE 2.0 Act, certain catch-up contributions made to an employer retirement plan after Dec. 31, 2023, must be designated as after-tax Roth contributions. The new catch-up rule only applies to employees participating in an employer or governmental retirement plan with prior-year Social Security wages that exceeded $145,000.