This afternoon, the IRS issued Notice 2023-62, providing welcome guidance relating to the mandatory Roth catch-up provision under Section 603 of the SECURE Act 2.0 (“S2”), which is effective for plan years beginning after December 31, 2023. First, the Notice clarifies that catch-up contributions are still allowed after 2023, despite a technical glitch in S2. Second, the Notice provides a two year administrative transition period for implementing mandatory Roth catch-up contributions for employees earning more than $145,000 (YAY!!!!).
Treasury and IRS took note of the many open questions surrounding the mandatory Roth catch-up provision under S2, and recognize the need for additional time to implement the changes to administration and payroll systems. Under the two year administrative transition period, all catch-up eligible employees (even those earning more than $145,000) may continue to make pre-tax catch-up contributions until tax years beginning after December 31, 2025. We can’t think of a better way to celebrate the penultimate Friday of the summer!
Stay tuned for a more comprehensive blog post on Notice 2023-62, which will be posted shortly!