The IRS announced late last Friday, August 25, 2023, that it will provide a two-year transition period for the SECURE 2.0 Act provision that requires catch-up retirement contributions by highly compensated employees be made as after-tax Roth contributions. (IR-2023-155; IRS Notice 2023-62) This means that employers will not be required to comply with this requirement until 2026.
Under §603 of SECURE 2.0 Act, participants age 50 and older in an employer 401(k), 403(b), or 457(b) plans whose wages exceeded $145,000 from that employer in the prior taxable year must make catch-up contributions on a Roth basis starting in 2024. The IRS’s new two-year transition rule pushing this requirement out until 2026 allows employer plans and participants more time to prepare for this change.
The notice is available at: www.irs.gov/pub/irs-drop/n-23-62.pdf
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