On August 25, 2023, the IRS issued Notice 2023-62, which provides limited guidance on the changes made by SECURE Act 2.0 to age 50 or older Catch-up Contribution provisions. The most important part of this notice is the creation of an administrative implementation delay period that will give plans additional time to meet the SECURE 2.0 requirement that catch-up contributions for participants who earn more than $145,000 in a prior plan year must be made to the plan as Roth contributions.
Until taxable years beginning after December 31, 2025, any catch-up contributions for those over $145,000, participants will be treated as catch-up, even if they are not designated as Roth contributions. In addition, plans that do not currently allow Roth contributions will be allowed to accept catch-up contributions during this period.
The Notice also acknowledges the intent of Treasury and the IRS to issue additional guidance on these provisions and outlines certain areas which will be included based on comments received from the industry.
- Guidance as to how the SECURE 2.0 over $145,000 catch-up provisions will apply to participants who do not earn FICA wages (i.e., self-employed individuals).
- Guidance as to how the plan administrator/employer will be permitted to reclassify pre-tax catch-up elections as Roth for the affected participants.
- Guidance as to how a plan maintained by more than one employer would (or would not) have to aggregate wages for an employee who provides service to more than one employer under the combined plan.