IRS Provides Transition Period for SECURE 2.0 Act Roth Requirement

On August 25, the IRS announced an administrative transition period to extend until 2026 the new requirement that additional elective deferrals (catch-up contributions) made by higher-income participants in retirement plans be designated as after-tax Roth contributions [Notice 2023-62, 8-25-23].

Under §603 of the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act, the new Roth catch-up contribution rule applies to employees who participate in a §401(k), §403(b), or §457(b) plan and whose prior-year social security wages exceeded $145,000. The rule was set to take effect on January 1, 2024, but the transition period provides employers until January 1, 2026, to fully implement the new requirements.

The notice also provides an explanation of the tax law changes made by §603 of the SECURE 2.0 Act. More coverage will be provided in Payroll Currently (Issue 9, Vol. 31, 9-1-23).

Comments Due October 24

The request for comments in Notice 2023-62 is broader than most requests. In addition to asking for comments on any aspect of §603 of the SECURE 2.0 Act, the IRS requests comments on other items.

Comments should be submitted in writing on or before October 24, 2023, and should include a reference to Notice 2023-62. Comments may be submitted electronically via the Federal eRulemaking Portal or sent to: Internal Revenue Service, Attn: CC:PA:LPD:PR (Notice 2023 62), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

To learn more about federal and state laws, regulations, and information to keep your company’s payroll operations in compliance, check out Payroll Source Plus!

Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Senior Manager of Payroll Information Resources for PayrollOrg.