IRS Will Delay 401(k) Roth Catch-Up Provision Under SECURE 2.0
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.
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Posted 8/25/2023, 8:48:51 PM
bloomberglaw.com
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High earners aged 50 and above are granted a two-year extension by the IRS on the rule that limited their 401(k) contributions.
The Internal Revenue Service has extended the deadline for compliance with the new requirement for Roth catch-up contributions until 2026, allowing higher-income participants in retirement plans to designate their catch-up contributions as after-tax Roth contributions.
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.
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.