The new rules regarding Roth catch-up contributions, which were supposed to start in 2024 have been delayed until 2026.
What is a catch-up contribution?
Catch-up contributions are additional contributions that participants who are age 50 or older can make to certain retirement plans (401k, 403b, 457b), in excess of the regular limits. The catch-up contribution increases each year due to inflation. The catch-up contribution for 2023 is $7,500.
What were the old rules?
Catch-up contributions could be made on a pre-tax or Roth basis (if permitted by the plan sponsor), and all eligible participants under the plan generally had to be allowed to make the same elections with respect to catch-up contributions.
What are the new rules?
The SECURE 2.0 Act requires catch-up contributions for participants whose wages for the preceding calendar year exceeded $145,000 to be made on a Roth basis. In addition, the SECURE 2.0 Act provides that, if a plan allows an eligible participant who is subject to the new Roth catch-up contribution rule to make catch-up contributions on a Roth basis, then all other eligible participants in the plan who are not subject to the new rule must be permitted to make catch-up contributions on either a pre-tax or Roth basis. These two changes are collectively referred to as the “new Roth catch-up contribution rule.”
This new guidance is found in Notice 2023-62. In addition, the notice indicates that the IRS intends to issue further guidance regarding the new Roth catch-up contribution rule when it goes into effect in 2026.
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About F. Bryan Haarlander, EA, CTRS:
Bryan Haarlander is an IRS-licensed Enrolled Agent and a Certified Tax Resolution Specialist who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA. This includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, and West Chester. We also service clients in Delaware, New Jersey, New York, and throughout the continental United States. Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.
