Retirement Savings Plans,For Individuals,For Plan Sponsors,Custom

IRS Issues 2-Year Delay for Key SECURE 2.0 Provision: Requirements for Roth Age Based Catch-Up Contributions

August 25, 2023

Today, the Internal Revenue Service (IRS) issued Notice 2023-62 announcing a 2-year administrative transition period (delay) that extends until 2026 with respect to the new SECURE 2.0 requirement that any age based catch-up contributions made by participants earning over $145,000 must be designated as after-tax Roth contributions.

In addition, the IRS also clarified that plan participants who are age 50 and over can continue to make catch up contributions after 2023, regardless of income, correcting a drafting error in SECURE 2.0.

The Department of the Treasury and the IRS had been made aware of MissionSquare Retirement client concerns with being able to appropriately implement the provision.  This transition period will provide time to facilitate plan and payroll changes needed for compliance with the Roth requirement.

In continued response to concerns raised by MissionSquare, the Treasury Department and the IRS intend to issue further guidance addressing concerns of government employers who do not currently have wages for purposes of FICA.

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