Benefits Monthly Minute UPDATE: SECURE 2.0 Roth Catchup Deadline Delayed Until 2026

In Notice 2023-62, the IRS walked back the SECURE 2.0 rule that required catch-up contributions to be designated as Roth contributions except in the case of employees with compensation of $145,000 or less (indexed), by announcing a 2-year administrative transition period. As reported in the January 2023 Monthly Minute, under current law, catch-up contributions can be made on a pre-tax or Roth basis, however, Section 603 of Secure 2.0 changed that by instituting a Roth requirement for higher earners, effective for taxable years beginning after December 31, 2023. Under the new transitional period, until taxable years beginning after December 31, 2025, (1) catch-up contributions will be treated as satisfying the new requirements even if they are not designated as Roth, and (2) a plan that does not provide for designated Roth contributions will be treated as satisfying the new requirements as well.

Given the approaching deadline, plan sponsors and third party administrators who struggled with the tight implementation timeframe can now breathe a sigh of relief. We will keep you apprised as additional guidance is released.

The KMK Law Employee Benefits & Executive Compensation Group is available to assist with these and other issues.

Lisa Wintersheimer Michel

John F. Meisenhelder

Antoinette L. Schindel

Kelly E. MacDonald

Rachel M. Pappenfus

KMK Employee Benefits and Executive Compensation email updates are intended to bring attention to benefits and executive compensation issues and developments in the law and are not intended as legal advice for any particular client or any particular situation. Please consult with counsel of your choice regarding any specific questions you may have.

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