Regulatory Updates
Regulatory Updates provide quick access to employee benefit regulations, rulings and other guidance released by governmental agencies in the U.S. and Canada.
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IRS Releases Guidance on Secure 2.0 Act Section 603 Catch-Up Contributions; Comments Due October 24
Aug 28, 2023, 05:00
by
Tyler Lloyd
The Internal Revenue Service (IRS) issued Notice 2023-62
providing initial guidance for Section 603 of the SECURE 2.0 Act. Under
Section 603, starting in 2024, the new Roth catch-up contribution rule
applies to an employee who participates in a 401(k), 403(b) or
governmental 457(b) plan and whose prior-year Social Security wages
exceeded $145,000.
The notice:
- Announces an administrative transition period that extends until 2026 the new requirement that any catch-up contributions made by higher‑income participants in 401(k) and similar retirement plans must be designated as after-tax Roth contributions. The administrative transition period will help taxpayers transition smoothly to the new Roth catch-up requirement and is designed to facilitate an orderly transition for compliance with that requirement.
- Clarifies that the SECURE 2.0
Act does not prohibit plans from permitting catch-up contributions, so
plan participants who are age 50 and over can still make catch-up
contributions after 2023, regardless of income.
The
notice is not intended to provide comprehensive guidance as to Section
603 of the SECURE 2.0 Act, but rather is intended to provide guidance on
particular issues to assist in the implementation of that section.
Comments are due October 24, 2023.