In a notable shift, the Internal Revenue Service (IRS) has delayed a pivotal component of the SECURE 2.0 Act of 2022 (SECURE 2.0) that pertains to high-wage earners. This ruling stipulates that all catch-up contributions for this demographic must be made exclusively on a Roth (after-tax) basis, starting from January 1, 2024. The term ‘catch-up contributions’ refers to the supplementary deferrals that participants, set to be at least 50 years old by the end-year, are allowed.
This development will likely have a significant impact on plan sponsors who were trying to gear up for the forthcoming changes. It’s a complex component of the SECURE 2.0 legislation that seems to be largely regarded as a challenge, but the recent delay will surely offer some relief. Interpreting and adapting to such changes demands both time and resources, factors which are now somewhat more lenient.
For further information about the delay and its implications, the original article detailing the update can be found here.