IRS Guidance on Roth Catch-Up Contributions

On August 25, 2023, the IRS issued new guidance announcing an administrative transition period for the new Roth catch-up requirement that extends until 2026. This IRS announcement is included in the IRS Notice 2023-62 and is now posted on IRS.gov. This notice provides initial guidance for section 603 of the SECURE 2.0 Act, enacted in December 2022. Under that provision, 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 IRS announcement said 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. The notice also 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.

 For more information, check out the IRS announcement or full Notice 2023-62.