The IRS will grant a two-year transition period for retirement plans to comply with a new policy on high-income catch-up contributions, providing relief to the industry.
The IRS has announced a two-year delay on a change that would have eliminated the upfront tax break on catch-up contributions for higher earners, allowing them to continue making pretax catch-up contributions to retirement plans through 2025.
The IRS has postponed the implementation of a new rule that would require higher earners to make catch-up 401(k) contributions on an after-tax basis into a Roth account, rather than pretax.
Millions of higher-earning Americans will be affected by the SECURE 2.0 Act, which changes the "catch-up" contributions in traditional 401(k) plans to after-tax Roth contributions starting in 2026, altering the tax advantages for older workers who make catch-up contributions.
